m 


in  k  McT/^ 


La«   '- 


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to 


THE  LIBRARY  . 
OF 
THE  UNIVERSITY 
OE  CALIEORNIA 

LOS  ANGELES 

SCHOOL  OF  LAW 


LAW    OF    INTEREST 


PRINCIPLES 


LAW    OF    INTEREST 


AS    APPLIED   BY 


COURTS  OF  LAW  AND  EQUITY 


UNITED   STATES  AND  GREAT  BRITAIN; 


AND   THE   TEXT   OF 


THE  GENERAL  INTEREST  STATUTES 


IN  FORCE  IN  THE 


UNITED  STATES,  GREAT  BRITAIN  AND  THE  DOMINION  OF  CANADA. 


BY 

SIDNEY    PERLEY 

OF  THE  MASSACHUSETTS  BAR. 


BOSTON : 
PUBLISHED    BY    GEORGE    B.    REED 

£atD    |3ubU0l}£r 

1893 


Copyright,  1893, 
By  Sidney  Perley. 


T 

?4znl 


PEEFACE. 


Having,  in  his  practice,  repeatedly  hud  occasion  to  ex- 
amine the  law  of  interest,  the  writer  has  noticed  that  little 
attention  had  been  given  to  this  important  branch  of  the 
law,  — a  branch,  too,  that  is  broader  in  its  application  than 
almost  any  other.  The  need  of  a  general  knowledge  of 
the  law  of  interest  was  so  apparent  that  for  several  years 
past  he  has  continued  his  examination  of  the  cases  bearing 
upon  the  whole  subject,  and  at  the  request  of  the  pub- 
lisher has  compiled  the  result  of  his  researches  for  the 
use  of  the  bar.  There  are  nearly  seven  thousand  decisions 
cited,  and  these  comprise  all  the  cases  of  value  that  have 
been  decided  to  the  time  of  the  examination  of  the  proof- 
sheets. 

On  many  questions  in  the  law  of  interest  there  is  such 
a  divei'sity  of  opinion  that  it  is  impossible  to  harmonize 
the  decisions.  To  settle  those  points  statutes  should  be 
passed.  And  when  the  great  dissimilarity  of  the  statutory 
laws  that  already  exist  is  considered,  the  passage  of  general 
statutes  seems  imperative.  Because  the  interest  statutes 
of  the  different  states  are  so  unlike,  it  is  deemed  necessary 
to  insert  the  text  of  those  that  are  more  general. 

The  writer  has  the  satisfaction  of  knowing  that  he  has 
endeavored  to  do  his  work  well,  and  trusts  that  it  will  be 

useful  to  the  bar. 

Sidney  Perley. 

Salem,  Mass.,  June  7,  1893. 

(v) 


^^n>^'y^^  a 


conte:n'ts. 


CHAPTER  I. 


Page 
Definition  and  history  of  interest,    ....         1 

CHAPTER  II. 
Contractual  interest,       ......  5 

I.     Express  contracts  for  interest,         ...         6 

a.  The  contract,      .....  6 

b.  Variance,        .         .         .  .         .         .11 

c.  Interest  on  a  contingency,            .         .  12 

d.  Effect  of  interest  on  maturity,         .  .       13 

e.  Effect  of  interest  on  negotiability,       .  14 

/.  Alteration, 14 

g.  Indorser's  and  guarantor's  liability,     .  15 

7i.  Present  wortb,        .         .         .         .  .15 

I.  Accrued  interest,         ....  16 

j.  Apportionment,      .         .         .         .  .16 

k.  Insolvency,          .....  16 

I.  How  interest  is  transferred,    .         .         .17 

m.  Pa3'ment,    ......  17 

n.  The  governing  law,         ....  20 

II.     Implied  contracts  for  interest,      ...  20 

a.  Previous  dealings,           ....  20 

b.  General  usage,             ....  21 

c.  Admission,              .         .         .         .         .  21 

d.  Acceptance  of  accounts,      ...  21 

CHAPTER  III. 
Interest  allowed  as  damages,  ....  22 

I.     Relating  to  persons,         .....       33 
a.  Administrators,  .         .         .         .  33 

(vii) 


VIU  CONTENTS. 


Page 


Interest  allowed  as  damages,  continued, 
I.     Kelatiug  to  persons,  continued, 

h.  Agents,  attorney's  and  factors,          ,         .  40 

c.  Assignees  of  bankrupts  and  insolvents,  44 

d.  Banks,             ......  46 

e.  Solvent  estates,           ....  46 

/.  Executors,      ......  47 

g.   Garnishees,  interpleaders,  etc.,               .  56 

h.  Guardians,      ......  60 

i.  Indorsers,             .....  64 

j.  Masters  in  chancery,       ....  65 

7i'.  Minors,       ......  65 

l.  Municipal  corporations,            ...  65 

m.  Officers,      ......  66 

n.  Partners,        ......  69 

o.  Receivers,            .....  72 

j).  Stakeholders,           .....  72 

q.  Stockholders,      .....  73 

r.  Sureties  and  guarantors,          ...  73 

s.  Trustees,     ......  75 

II.     Relating  to  subject  matter,       ....  79 

0.  Running  accounts,       ....  79 
h.  Account  stated,      .....  85 

c.  Advancements,             ....  86 

d.  Alimon}',        ......  87 

e.  Annuities,            .....  87 

/.  Betterments,            .....  88 

g.  Bills  and  notes,             ....  88 

li.  Bonds  and  recognizances,        ...  89 

/.  Bottomry,            .....  92 

j.  Damages,        ......  92 

k.  Debts  of  another,         ....  97 

1.  Deposits,         ......  97 

m.  Dividends,            .....  98 

n.  Dower,  etc.,             .....  99 

0.  Money  fraudulently  oljlaiued,      .          .  99 

p.  Incumbrances,        .....  99 


CONTENTS. 


IX 


Interest  allowed  as  damages,  continued, 

II.     Relating  to  subject  matter,  continued, 
q.  Insolvency,  .... 

r.  Judgments,  .... 

s.  Legacies,  .... 

t.  Mechanic's  liens,  .         .      ^• 

u.  Money  had  and  received, 
,  V.  Money  paid  for  the  use  of  anotlier, 

10.  Partitions,  .... 

X.  Penalties,  .... 

y.  Policies,      ..... 

z.  Rent,      ...... 

aa.  Replevin,  .... 

hh.  Royalties, 

cc.  Sales,  ..... 

dd.  Subscriptions,         .... 

ee.  Taxes, 

ff.  Trover, 

CHAPTER  IV. 
How    INTEREST    IS    BARRED, 

a.  Act  of  creditor, 

6.  Change  of  legal  rate, 

c.  Court's  order,      .... 

d.  Garnishee  process  anil  interpleader, 

e.  Judgment,  .... 
/.  Negligence,  .  .         .         • 
g.  Payment  of  principal, 

h.  Statute  of  limitations, 

i.  Tender,       .  .         .         .         • 

;.  Waiver, 

A;.  War, 


Page 

100 

102 

111 

122 

122 

127 

128 

128 

128 

129 

131 

131 

131 

134 

134 

135 


137 
138 
139 
139 
139 
140 
140 
140 
142 
142 
UA 
145 


CHAPTER  V. 


Rate  of  interest, 

I.     The  legal  rate, 
II.     The  conventional  rate. 


147 
151 
154 


X  CONTENTS. 

CHAPTER  VI. 

Page 

Compound  interest, 157 

I,     Contracts  for  compound  interest,  .  158 

II.     When  fiUowed  as  damages,       .         .  .  .159 

III.  If  waid  it  cannot  be  recovered,      .         .         .         164 

IV.  Compound  interest  tables,        .         .         .         .164 

CHAPTER  VII. 
Partial  payments,        .......     167 

CHAPTER  VIII. 

Pleading  and  practice,        .         .         .         .         .  .172 

I.     Pleading, 173 

II.     Practice,          .         .         .         .         .         .  .176 

a.  Province  of  the  court,              .         .  .176 

b.  Province  of  the  jury,            .         .         .  178 

c.  Province  of  the  clerk,     ....     181 

d.  Evidence,             .         .         .         .         .  181 

e.  Foreign  law  and  contracts,               .  ,     182 
/.  INIiscellaneous  decisions,       .         .         .  183 

III.  Effect  of  interest  on  jurisdiction  of  court,  185 

IV.  Recovery  of  interest  paid  by  mistake,  .         186 

CHAPTER  IX. 

Conflict  of  laws, 187 

I.     Law  of  what  place  governs,  .         .         .         187 

a.  Generally,  187 

&.  Usury, 190 

II.     Law  of  what  time  governs,      .         .         .         .193 

CHAPTER  X. 

Usury,            .         .         .         .         •         .         .         .  .197 

I.     What  contracts  are  usurious,        .          .          .  201 

a.  Usury  in  original  contract,      .          .  .210 

b.  Discounting, 211 


CONTENTS. 


XI 


UsDRT,  C07itinued, 


II. 


III. 


IV. 


V. 
VI. 


6. 
c. 
d. 
e. 


h. 
i. 

J- 
k. 
I. 

m. 
n. 


Page 

What  contracts  are  usurious,  continued, 

c.  Forbearance  to  sue,          ....  212 

d.  Lender  must  receive  the  usury,        .         .  213 

e.  Receipt  of  usurious  interest,        .         .  213 
What  contracts  are  not  usurious,      .         .         .214 

a.  Usury  must  be  paid  for  the  use  of  money, 

etc., 215 

Frequent  payments  of  interest,        .         .  221 

Compound  interest,     ....  221 

Interest  on  condition,  etc.,      .         .         .  222 

Made  payable  in  another  state,     .         .  223 

/.  Ante-date  interest,          ....  223 

g.  Ante-dated  notes,  ....  223 
Reckoning  time,  .....  224 
Trifling  amount  of  usury,  .  .  224 
Interest  in  advance,  ....  224 
Charging  market  rates  on  time  bills,  .  225 
Time  price  higher  than  cash  price,  .  225 
Fluctuating  values,  ....  225 
Security  for  first  loan  when  making  sec- 
ond,       ......  226 

o.  Payment  of  usurious  interest  by  stranger 

at  debtor's  request,     ....  226 

p.  Oppressive  contracts,           .         .         .  227 

Contracts  to  effect  usurious  contracts,             .  227 

a.  Subsequent  security,             .         .         .  228 

6.  Renewal, 228 

c.  Absolute  deed,              ....  232 

d.  Forbearance,           .....  232 

e.  Novation, 232 

/.  Awards,  decrees  and  judgments,      .         .  233 

Subsequent  contracts  for  usury,             .         .  233 

a.  To  pay, 233 

6.  To  receive, 234 

Legal  consideration  of  usurious  contracts,        .  235 

Usurious  interest  as  a  consideration,     .         .  236 


Xll 


CONTENTS. 


Pnge 


JscRY,  continued^ 

VII. 

Subrogation, 

.     237 

VIII. 

Parties, 

237 

a. 

Agents, 

.     237 

b. 

Banks, 

242 

c. 

Indorsers  and  guarantors, 

.     242 

d. 

Partners, 

244 

€. 

Sureties,         ..... 

.     244 

IX. 

Piiro 

ing  contracts  of  usury. 

246 

a. 

By  agreement,        .... 

.     246 

b. 

By  payment,        ..... 

247 

X. 

Relief  from  usmy,          .... 

.     249 

a. 

Directly  in  equity,     .... 

250 

1.     By  borrowers. 

.     250 

a.  Cancellation, 

252 

5.  Discovery, 

.     252 

c.  Injunction,     . 

252 

d.  Reconveyance, 

.     253 

e.  Recovery  of  usury  paid, 

253 

2.     By  lenders. 

.     253 

b. 

Recovery  of  usury  paid,     . 

254 

1.     By  suit,        .... 

.     254 

2.     By  set-off,         .... 

257 

3.     By  forfeiture, 

.     261 

c. 

Who  may  recover,  or  plead  usury. 

262 

d. 

Who  is  liable  to  return  usury  paid. 

.     274 

e. 

Pleading  and  practice. 

275 

1.  Pleading,        .... 

.     275 

2.  Proof, 

280 

3.  Recovery  of  security,     . 

.     284 

4.  Law  and  fact,     .... 

284 

5.  Who  may  be  witnesses. 

.     285 

/. 

Defences  to  claim  for  usury, 

288 

1.  Bona  fide  holder. 

.     288 

2.  Estoppel,             .... 

294 

3.  Judgment,      .... 

.     295 

4.  Laches,       ..... 

297 

CONTENTS.  XUl 

Page 

Usury,  continued, 

X.     Relief  from  usury,  continued, 

f.  Defences  to  claim  for  usury,  continued, 

5.  Novation,       ......  297 

6.  Payment,             .         .         .         •  297 

7.  Release,          .....  298 

8.  Repeal  of  usury  law,            .         •  298 

9.  Statute  of  limitations,             .         .  299 
10.  Waiver, 299 


.     301 


CHAPTER  XI. 
Interest  in  equity,        ..... 

CHAPTER  XII. 
Effect  of  statute  of  limitations  upon  interest,  303 

CHAPTER  XIII. 
Interest  statutes,         ..... 


306 


Index, 411 


THE  LAW  OF  INTEREST. 


CHAPTER  I. 

DEFINITION  AND  HISTORY  OF  INTEREST. 

INTEREST  is  the  compensation  that  one  person  gives 
for  the  use  and  profit  of  another's  money,  or,  the  legal 
damage  he  is  obliged  to  pay  to  another  person  who  has 
lost  the  use  of  his  money  through  the  payor's  act  or  neg- 
ligence, although  the  payor  may  not  have  received  any 
benefit  therefrom.^  The  word  interest  is  derived  from  the 
Latin  words,  inter,  between,  and  esse,  to  be ;  and  has  ref- 
erence to  the  time  between  the  receiving  and  the  paying 
back  the  money  for  which  period  only  interest  is  allowed. 

The  word  interest,  used  in  this  connection,  is  compara- 
tively modern.  The  original  term  was  usury.  For  the 
last  three  centuries  the  latter  term  has  been  applied  only 
to  the  excess  of  interest  above  the  maximum  legal  rate 
allowed,  that  is,  illegal  interest,  and  the  word  as  early 
used  has  become  obsolete.  The  term  interest  is  broad  and 
means  all  interest,  whether  the  rate  is  legal  or  usurious. 

In  early  times,  iu  conformity  to  the  canons  of  the  church, 
all  interest  whatever  upon  money  loaned  was  prohibited.^ 
To  take  it  was,  also,  in  foro  conscieniicE,  punished  as  a 
crime  next  to  that  of  murder,  and  if  the  guilty  parties  had 
been  habitual  receivers  of  interest  all  of  their  estate  was 

>53  Mich.  453(1884). 

^  1  Wils.  (Eng.)  290  (1750). 

(1) 


2  THE    LAW   OF   INTEREST. 

forfeited  to  the  king.^  In  one  of  the  earliest  law  books 
extant,- it  is  lamented  as  "an  a1)Usion  of  the  common  law" 
that  the  ofiender  Avas  not  likewise  deprived  of  Christi m 
burial.  Our  Savior  seems  to  have  favored  the  taking  of 
interest  f  though  it  was  forbidden  in  the  Mosaic  law  among 
the  Jews  themselves,*  it,  however,  being  provided  that 
they  might  "lend  upon  usury"  to  a  stranger.'^  This  feeling 
against  the  taking  of  interest  for  the  use  of  money  was 
strengthened,  probably,  by  the  communism  which  sprang 
up  in  the  early  Christian  church. 

Judge  Woodbury  of  New  Hampshire  said  :^ — 

"  The  prejudices  on  this  subject  have  doubtless  been  embittered  by 
the  circumstance,  that,  anciently,  Jews  Avere  the  principal  money- 
lenders; and  such  is  still  the  extent  of  those  prejudices  as  hardly  to 
be  accounted  for,  except  on  the  belief  that  interest  is  prohibited  by 
the  scriptures  as  a  moral  offence,  or  that  associations  are  continued, 
Avhich  have  some  connection  Avith  the  fumUment  of  the  prophecy 
against  the  persecuted  race  of  Israel." 

The  Koran  also  prohibited  the  taking  of  interest,  and 
England,  France  and  Turkey  enacted  express  laws  against 
it.^  Aristotle,  Pothier  and  Domat  condemned  all  interest, 
the  latter  declaring  "that  every  Covenant,  or  Connnerce, 
whereby  Intereft  is  taken  for  a  Loan,  whatever  pretext  is 
made  ufe  of  to  colour  it,  is  a  criminal  Ufury,  most  pioufly 
condenmed  by  the  Law  of  God,  and  that  of  the  Church, 
and  moft  juftly  punifhed  by  the  Ordinances.'"'^  The  same 
writer,  in  speaking  of  interest  among  the  Romans,  said  : — 

>  13  Tex.  279  (1855). 

•"Mirror  of  Justices,"  191,  248.  This  was  published  in  Old  French 
long  before  the  Conquest,  but  the  author  is  unknown. 

3  Matt.  XXV  :  27 ;  Luke  xix  :  23. 

*  Ex.  xxii:  25;  Lev.  xxv:  3G,  37;  Neh.  v:  7,  10;  Ps.  xv  :  5;  Prov. 
xxviii:  8;  Isa.  xxiv :  2;  Jer.  xv :  10;  Ezek.  xviii :  8,  13,  17;  xxii:  12. 

'"  Deut.  xxiii :  19,  20. 

»2N.  H.  42  (1819). 

■>  13  Tex.  279  (18.j5). 

8  1  Domat,  b.  1,  tit.  G.  p.  131. 


DEFINITION    AND   HISTORY   OF    INTEREST.  3 

"  It  was  prohibited  at  Home  in  the  firft  Ages  of  the  Commonwealth, 
and  long  before  the  Gofpel  was  known  there ;  and  it  was  even  more 
rigorou fly  prohibited  tlian  Theft.  Since  whereas  the  Punifliment  of 
Theft  was  only  the  double  of  tlie  thing  ftoUen,  that  of  Ufury  was  the 
quadruple. '  Thus  Ufury  was  looked  upon  among  the  Eomans  as  a  very 
pernicious  crime.  "^ 

On  the  contrary,  Lord  Bacon  said  that  "that  opinion 
must  be  sent  to  Utopia ;"  Holland  allowed  the  receipt  of 
interest;  and  Solon,  Locke,  Tnrgot,  Bentham  and  others 
also  contended  against  the  old  view. 

Notwithstanding  the  anathemas  of  the  church,  and  the 
punishments  and  forfeitures  of  the  state,  interest  could 
not  be  suppressed.  There  were  always  people  ready  to 
lend  and  others  to  borrow,  and  the  lender  would  not  let 
out  his  money  unless  he  received  some  recompense  for  its 
use,  and  the  borrower  needed  it  so  much  that  he  would 
pay  rates  that  would  induce  the  lender  to  run  the  risk  of 
detection  and  conviction.  The  community,  therefore,  in- 
stead of  being  benefited  by  these  prohibitory  laws,  was 
seriously  harmed. 

It  seems  to  the  writer  that  a  principal  cause  of  the  more 
common  allowance  of  interest  that  followed  was  the  increase 
in  the  amount  of  personal  property.  In  early  times  a 
man's  possessions  consisted  principally  of  real  estate,  and 
the  articles  that  could  be  loaned  were  those  of  necessary 
use  and  therefore  not  expected  to  be  loaned  in  the  mercan- 
tile sense ;  but  in  these  later  days,  when  chattels  are  so 
abundant  that  they  are  the  most  common  subject  of  trade, 
pay  for  the  use  of  them  seems  only  proper. 

The  first  statute  passed  in  England  which  rendered  the 
taking  of  any  interest  lawful  was  enacted  in  1545.^  But 
it  is  not  known  whether  it  was  the  outfjrowth  of  more  en- 

o 

'  Tacitus  6  annalium,  anno  iirhis  786. 
^  1  Domat,  b.  1,  tit.  6,  p.  128. 
^  37  Plenry  VIII,  ch.  9. 


4  THE    LAW    OF   INTEREST. 

liirhtencd  views  as  to  the  justice,  honesty  and  advantage  of 
lettino-  money  at  interest,  or  the  dictate  of  policy,  which 
concluded  that,  as  the  vice  could  not  be  suppressed,  it 
would  be  better  to  tolerate  it,  with  many  and  severe  re- 
strictions. From  that  time  the  courts  of  England  and 
other  countries  gradually  broke  down  the  old  barriers  by 
allowing  interest  in  a  class  of  mercantile  actions  and  in  a 
few  isolated  cases,  and,  after  about  a  century,  interest  was 
sanctioned  by  the  courts  in  a  large  numl^er  of  contracts. 

As  interest  obtained  an  increasing  support  in  England, 
the  people  in  the  new  world  correspondingly  grew  in  favor 
of  it.  Its  allowance  has  now  become  very  general  as  to 
subject  matter,  relating  to  nearly  every  contract,  simple, 
special  and  contract  of  record,  and  to  many  torts. 


CHAPTER  11. 

CONTRACTUAL  INTEREST. 

INTEREST  is  allowed  by  law  only  on  the  ground  of  a 
contract,  express  or  implied,  or  as  damages  for  breach 
of  a  contract,  or  violation  of  a  duty.^  The  law  does  not 
of  its  own  accord  give  interest  before  a  debt  is  due  ;  such 
interest  must  be  created  by  agreement  of  the  parties. ^ 
Therefore,  interest  is  divided  into  two  great  and  well  de- 
fined classes,  the  first  being  that  of  contractual  interest, 
and  the  second  interest  allowed  as  damages.  Contractual 
interest  exists  only  by  agreement  of  the  parties,  while  in- 
terest as  damages  is  allowed  by  law  in  cases  where  there 
has  not  been,  and  in  many  instances  where  there  could  not 
be,  an  engagement  to  pay  it,  it  being  simply  damages  for 
the  detention  of  a  debt  in  proportion  to  its  amount  and 
the  length  of  time  it  has  been  detained.  Again,  contract- 
ual interest  is  not  given  as  damages,  nor  as  the  incident 
of  the  debt,^ro  tanto  it  is  the  debt  itself,^  a  substantive  part 
of  it,*  as  much  so  as  the  principal,  for  both  were  contracted 

'  15  L.  R.,  Ch.  D.  (Eng.)  169  (1880)  ;  49  L.  J.,  Cli.  (Eiig.)  769  (1880)  ; 
43  L.  T.,  N.  S.  (Eng.)  229  (1880)  ;  28  W.  R.  (Eng.)  818;  22  Conn.  380 
(1853)  ;  3  Harr.  (Del.)  528  (1843)  ;  46  Mich.  193  (1881)  ;  40  Minn.  512 
(1889) .  Interest  was  early  allowed  as  damages  in  England,  at  common 
law,  on  mercantile  securities.  4  M.  &  P.  (Eng.)  589  (1830) ;  6  Bing. 
(Eng.)  709  (1830). 

'^  G4  Tex.  94  (1885)  ;  1  II.  &  M.  (Va.)  211  (1807). 

3  11  Pa.  St.  282  (1849). 

♦  11  La.  409  (1837) ;  12  Har.  (24  Pa.  St.)  310  (1855). 

(5) 


6  THE    LAW    OF    INTEREST. 

for,  and  can  be  recovered  as  a  matter  of  right  ;^  while  in- 
terest that  is  given  as  damages  is  simply  incidental  to  the 
debt,  and  does  not  follow  it  as  of  right.^ 

Contractual  interest  is  created  either  expressly  or  im- 
pliedly. 

I.  EXPRESS  CONTRACTS  FOR  INTEREST. 

Interest  is  created  expressly  when  the  parties  to  the  con- 
tract agree  in  terms  that  interest  shall  be  paid.  This  is 
usually  done,  when  the  contract  is  in  writing,  l)y  adding 
the  words  "bearing  interest,"  "with  interest,"  or,  "with  in- 
terest on  the  same."  If  the  contract  is  silent  as  to  interest 
it  bears  no  contractual  interest.^ 

It  maybe  a  contract  for  the  payment  of  interest  on  money 
to  l)e  loaned,  or  for  money  already  loaned,  although  in  the 
latter  case  it  is  not  strictly  a  contract  to  pay  interest.* 

Contracts  for  interest  have  the  same  elements  as  other 
contracts. 

(a)  The  contract.  The  contract  for  interest,  unless 
the  statute  law  makes  it  incumbent  upon  parties  to  put  such 
agreements  into  writing,  may  be  oral.^  But  if  a  written 
contract  says  nothing  about  interest,  interest  cannot  be 
added  to  it  by  an  oral  agreement  made  at  the  same  time  ;^ 
neither  can  the  rate  of  interest  be  thus  reduced,^  nor  the 
interest  be  agreed  to  be  paid  at  stated  times  f  though  oral 
af^reements  made  after  maturity,  whether  they  be  to  create 

>  llOU.  S.  174  (1883). 

2  llOU.  S.  174  (1883). 

3  8  Bush  (Ky.)  27G  (1871). 
"  21  Minn.  530  (1875). 

*  0  Mart.  (La.)  27G  (1819)  ;  7  La.  520  (1835);  13  Tex.  279  (1855). 

«  2  Mart.  (La.)  78  (1811). 

'  79  Mich.  504  (1890)  ;  80  Mich.  249  (1890). 

»  5G  Md.  433  (1881). 


CONTRACTUAL   INTEREST.  7 

new  engagements  to  pay  interest/  or  to  chauge  the  rate  or 
times  of  payment,-  are  good  and  binding. 

Like  other  contracts  the  agreement  for  the  payment  of 
interest  must  have  a  valuable  consideration  to  support  it.^ 
The  consideration  of  the  principal  part  of  the  contract  will 
sustain  the  interest  clause  of  the  agreement ;  but  if  the  con- 
tract to  pay  interest  is  separate  it  must  have  a  separate 
consideration  :  as,  for  instance,  a  promise  to  pay  interest 
from  its  date  on  a  non-interest-bearing  debt  already  due. 
In  such  a  case,  the  use  of  the  money  is  held  to  be  a  valid 
consideration.*  A  promise  of  forbearance  to  enforce  the 
collection  of  the  principal  will  also  support  an  engagement 
to  pay  such  interest.^  A  definite  promise  of  forbearance 
or  extension  of  time  for  an  engagement  to  pay  a  larger  rate 
of  interest,*'  or  to  make  more  frequent  payments  of  inter- 
est,^ is  a  valid  consideration.  But  an  agreement  after  ma- 
turity, in  consideration  of  the  payment  of  a  part  of  the 
note,  to  pay  interest  on  the  balance  is  without  considera- 
tion.^ 

Interest  is  to  be  paid  in  the  same  kind  of  money  as  the 
principal.^ 

The  rate  per  cent  may,  or  may  not,  be  agreed  upon,  and 
if  it  is  it  must  be  included  in  the  contract.  The  rate  agreed 
upon  will  govern  unless  it  is  contrary  to  statute  law,  or  is 
unconscionable. 1°   Parties  sometimes,  in  their  haste,  simply 

>  IKas.  285  (1863). 

2  12  Stew.(N.  J.)  376  (1885). 

3  36  0.  St.  361  (1881). 

*  5  Mart.,  N.  S.  (La.)  40  (1826). 
5  6  S.  C.  485  (1875). 
«  15Kas.  591  (1875). 

7  36  0.  St.  361  (1881). 

8  1  Kas.  285  (1863). 

9  64  Pa.  St.  63  (1870). 

>"  8  Ir.  R.,Eq.  (Ire.)  571-R  (1873)  ;  150  Mass.  524  (1890).   In  the  lat- 
ter case  five  per  ceut  per  month  Avas  held  not  to  be  unconscionable. 


8  THE    LAW    OF    INTEREST. 

add  to  contracts  the  words  "with  six  per  cent  ;"  and  in  such 
cases  the  courts  construe  it  to  mean  that  they  bear  interest 
at  six  per  cent  interest  per  annum. ^  Parties  can  agree  be- 
forehand what  the  rate  shall  be  after  maturity,  although  the 
contract  carries  no  interest  before  maturity .^  If  the  rate 
is  not  agreed  upon,  the  legal  rate  will  be  implied.^  For  a 
statement  of  the  law  in  general  relative  to  the  rate  of  in- 
terest see  chapter  five. 

If  no  time  is  stated  in  the  contract  when  interest  is  to 
begin  to  ran,  it  will  commence  at  the  time  the  contract  is 
made  ;*  because,  without  that  stipulation,  interest  as  dam- 
ages could  have  been  collected  from  its  maturity,  and, 
again,  the  promise  is  to  pay  the  interest  when  the  principal 
is  due,  which  of  course  must  relate  to  prior  interest,  if  to 
any.  In  this  respect  there  is  no  ditlerence  between  a  de- 
mand note  and  one  payable  at  a  future  day  certain.^  The 
same  rule  applies  also  to  a  note  which  stipulates  tliat  if  it 
is  not  paid  at  maturity  it  shall  bear  interest  —  the  interest 
will  run  from  the  date  of  the  contract.^  The  courts  have 
also  decided  that  a  note  dated  January  8,  1838,  bearing 
"interest  from  the  first  day  of  January  last,"  means  from 
January  1,  1837  f  and,  in  another  case,  where  it  was  stip- 

•  G3  Ind.  432  (1878)  ;  28  Iowa  olG  (1870)  ;  Walk.  (Miss.)  207  (1825). 
-  2  Puis.  (Me.)  282  (1876)  ;  3  Puis.  (Me.)  540  (1877). 

^  4  Ark.  454  (1842)  ;  9  Col.  228  (1886)  ;  15 Col.  320  (1890) ;  14  La.  Ann. 
681   (1859). 

*  1  Starkie  (Eng.)  452  (1816)  ;  79  Ala.  475  (1885)  ;  2  Ark.  115  (1839)  ; 
4  Ark.  210,  408  (1842)  ;  5  Ark.  166  (1843)  ;  8  Cal.  145  (1857)  ;  67  Cal.  127 
(1885)  ;  24  Conn.  500  (1850)  ;  7  La.  479  (1834)  ;  19  La.  Ann.  472  (1867)  ; 
49  Miss.  95  (1873)  ;  6  Mo.  App.  577  (1879)  ;  1  Zab.  (N.  J.)  18  (1847),  704 
(1848) ;  Add.  (Pa.)  323  (1797).  So  on  an  instalment  note,  also.  113 
Mass.  50  (1873). 

'  Henipst.  (U.  S.,  C.  C.)  155  (1831) ;  1  Lit.  (Ky.)  IGO  (1822). 
c  Mor.    (Iowa)    294    (1843)  ;    1  Iowa  204    (1855)  ;  8  Mart.  (La.)  716 
(1820). 
7  1  McM.  (S.  C.)  301  (1841). 


CONTRACTUAL   INTEREST.  9 

ulated  that  the  principal  was  to  become  due  on  January  1, 
1836,  and  that  it  should  carry  interest  "from  1835,"  the 
court  held  that  interest  was  to  be  paid  from  January  1, 
1835.^  Another  and  more  recent  case  was  where  a  note, 
dated  March  4,  1885,  was  made  payable  "on  the  5th 
March  after  date,"  which  the  Georgia  court  construed  to 
mean  on  the  face  of  it  that  it  became  due  March  5,  1880.- 

When  a  note  bears  interest  after  maturity,  it  runs  from 
the  day  of  maturity,  and  not  from  the  last  day  of  grace.'' 

Interest  as  a  general  rule  runs  until  the  principal  is  paid  ;* 
but  it  may  be  barred,^  temporarily  or  permanently,  and 
while  it  is  barred  it  does  not  run.  Contractual  interest 
exists  and  accrues  during  the  period  mentioned  in  the  con- 
tract only,*'  and  if  the  time  is  unlimited  it  runs  until  the 
principal  is  paid.  A  note,  however,  payable  one  day  after 
date,  with  interest  from  date  at  a  certain  rate  is  deemed  to 
be  a  contract  for  interest  after  the  maturity  of  the  principal.^ 

Interest  is  never  payable  at  more  than  one  time,  or  be- 
fore the  maturity  of  the  principal,  unless  there  is  an  express 
asrreement  to  that  efiect.^  This  is  true  m  both  contractual 
interest  and  interest  allowed  as  damages.  But  if  the  con- 
tract reads  "with  interest  to  be  paid  annually  ;"^  or,  "with 
the  annual  interest  till  the  principal  is  paid  ;"^*'  or,  "with 

'  8  Port.  (Ala.)  497  (1839). 
'•'  88  Ga.  298  (1891). 
3  G2Miss.  369  (1884). 

*  67  Mich.  605  (1888). 

*  See  chapter  four.  * 

«  This  rule  is  subject  to  modification  in  some  courts.  See  chapter 
five. 

'  14  S.  C.  341  (1880). 

8  21  Coim.  388  (1851)  ;  31  Pac.  Rep.  (Kas.)  1092  (1893)  ;  10  Mel.  32 
(1856);  2  Mass.  568  (1803);  3  Mass.  221  (1807);  3  Zab.  (N.J.)  200 
(1851)  ;  7  Barb.  (N.  Y.)  452,  5G0  (1849)  ;  5  How.  Pr.  (N.  Y.)  41  (1849)  ; 
1  Binn.  (Pa.)  152  (1806)  ;  16  Vt.  44  (1844). 

9  5  lied.  (Me.)  75  (1852)  ;  1  Strob.  (S.  C.)  426  (1847),. 
io  3  Conu.  445  (1820)  ;  42  Mich.  439  (1880). 


10  THE   LAW    OF   INTEREST. 

interest  annual  ly,"Hhe  interest  is  payable  annually,  whether 
thepnncipal  is  due  or  not.^  Such  interest  is  payable  at 
the  end  of  each  calendar  year,  reckoning  from  the  time  the 
interest  began  to  run  on  the  contract.^  And  the  principle 
is  the  same  if  the  parties  agree  to  pay  the  interest  at  the 
end  of  every  month,  etc.,^  Avhere  the  statute  tixcs  the  rate 
per  amuuu,  contracts  being  legally  made  for  payment  at 
the  rate,  before  the  principal  becomes  due,  at  periods  shorter 
than  a  year.^  When  interest  is  made  payable  annually 
upon  a  fixed  date,  the  fact  that  the  first  instalment  falls 
due  within  a  year  is  not  a  departure  from  the  terms  estab- 
lished.^ 

An  agreement  that  interest  shall  be  paid  anmiallv  does 
notextend  beyond  the  maturity  of  the  instrument,  without 
an  express  stipulation  to  that  efi'ect.  Where  a  note  is  pay- 
able within  a  year  "with  interest  from  date  payaljlc  annu- 
ally," it  is  held  to  be  a  contract  to  pay  interest  annually 
after  maturity  ;^  the  reason  being  that  in  order  to  give  the 
words  "payable  annually"  any  force  and  effect  it  is  neces- 
sary to  construe  them  as  a  promise  to  pay  the  interest  an- 
nually until  the  n(;te  is  fully  paid.  The  contract  would 
therefore  be  to  pay  the  interest  annually  after  as  well  as 
before  maturity. 

It  is  sometimes  a  nice  question  whether  the  words  "per 
annum,"  or  other  words  of  similar  import,  refer  to  the  time 
when  interest  is  payable  or  to  the  rate  per  cent.^  As,  for 
instance,  a  note  with  interest  at  "six  per  cent,  per  annum" 
is  not  payable  annually  ;  the  w^ords  "per  annum"  simply  in- 

>  49  Iowa  104  (1878). 

•^  Gl  Ga.  275  (1878)  ;  34  Ind.  115  (1870). 

3  34  Ind.  115  (1870). 

^  1  R.  I.  298  (1850). 

*  1  Wall.  (U.  S.)  384  (1863)  j  5  Paige  Ch.  (N.  Y.)  98  (1835). 

«  37  Mich.  87  (1877). 

7  19  S.  C.  85  (1882). 

8  39  Midi.  182  (1878).. 


CONTRACTUAL   INTEREST.  11 

dicate  that  the  rate  named  is  that  by  the  ycar.^  It  is  the 
same  if  it  reads  "with  ten  per  cent,  annually."^ 

(6)  Variance.  Where  there  is  a  variance  between  two 
instruments  which  form  a  single  transaction,  as  a  note  and 
a  mortgage,  the  courts  are  not  in  harmony  as  to  what  is  the 
proper  practice  to  follow.  There  are  two  manifest  rules  ex- 
tant. One  is  to  regard  the  two  instruments  as  one  trans- 
action, and  construe  them  together.^  As  where  a  note  gives 
interest  and  the  mortgage  is  silent ;  in  which  case  the  mort- 
gage is  bound  for  the  payment  of  the  interest.*  So  where 
the  mortgage  stipulated  that  the  interest  should  be  paya- 
ble monthly,  the  note  being  silent  as  to  when  interest  \vas 
payable,  interest  was  held  to  be  payable  monthly.^  The 
other  rule  is,  that  a  mortgage  is  to  be  regarded  merely  as 
a  security  of  the  note,  and  that  it  is  not  security  for  an}'- 
thing  more  than  the  amount  due  by  the  note  ;  as,  where 
the  note  is  silent  as  to  interest,  and  the  mortgage  carries 
interest,  none  will  be  allowed.^  A  mortgage  is  valid  for 
the  interest  of  a  note,  if  it  does  not  mention  it  in  terms  ;^ 
but,  the  Michigan  court  has  decided  that  a  mortgage  which 
says  nothing  about  interest  or  time  of  payment  is  due  as 
soon  as  given,  although  it  is  really  security  for  a  time  note 
not  due.^ 

In  case  of  a  discrepancy  in  the  amount  of  interest  named 
in  a  bond  and  coupon  attached,  the  amount  named  in  the 

>  61  Mo.  403  (1875). 

2  16  0.  St.  348  (1865). 

3  8  Kas.  456  (1871). 
*  7  La.  479  (1834). 

"  46  Iowa  357  (1877). 

«  130  Mass.  88  (1881).  The  Massachusetts  court  allows  oral  evi- 
dence to  be  admitted  to  shoAV  which  paper  expresses  the  real  agree- 
ment.    130  Mass.  88  (1881)  ;  134  Mass.  593  (1883). 

7  7  La.  479  (1834). 

8  40  Mich.  1  (1879). 


12  THE    LAW    OF    INTEREST. 

hoiul  has  been  held  to  control.^  The  holder  of  such  cou- 
pon, alter  its  severance  from  the  bond,  was  also  not  al- 
lowed to  recover  the  sum  named  in  the  coupon,  if  larger 
than  that  named  in  the  bondasthc  interest,  witiumt  show- 
inij  that  he  or  some  prior  holder  of  the  severed  coupon, 
acquired  the  same  in  good  faith,  before  maturity  and  with- 
out notice  of  the  error.^ 

(c)  Inleresl  on  a  contingency.  A  contract  may  "he 
made  payable  on  condition  that  if  paid  at  maturity  no  in- 
terest shall  be  charged,  but  if  not  then  paid  that  it  shall 
bear  interest  ;^  and  in  such  a  case  interest  will  be  allowed 
from  the  date  of  the  instrument.*  The  same  meaning  is 
given  to  the  contract  when  it  simply  says  "ten  per  cent. 
\i  not  paid  when  due."*  Interest  is  recoverable  from  its 
date  on  a  contract  to  pay  a  sum  by  several  instalments 
"without  interest,  Imt  with  interest  if  not  punctually  paid," 
should  there  bo  a  breach  of  the  agreement  to  pay.^ 

A  contract  may  stipuhite  that  if,  where  interest  is  to  be 
paid  at  certain  times,  an  instalment  of  interest  is  not  paid 
when  due,  the  whole  note  shall  become  due.''  In  such  a 
case  tiie  creditor  can  only  collect  the  interest  that  has 
accrued.^  But  if  interest  on  a  contract  is  to  be  paid  an- 
nually, and  if  not  so  paid  to  be  added  to  the  principal, 
the  morto-at'-e  iziven  to  secure  it  could  not  1)C  foreclosed 


o    o 


•  7  Spauld.  (Me.)  4G2  (1885). 
^  7  Spauld.  (xMe.)  402  (1885). 

=>  1  Kelley  (Ga.)  469  (1846);  1  Blf.  (Ind.)  GO  (1820),  213  (1822);  11 
lud.  392  (1858);  17  Ind.  10  (18Gn  ;  Ilarp-  (S.  C.)  397  (1824). 

*  1  Kelley  (Ga.:)  469  (184G)  ;  IBlf.  (Ind.)  69  (1820),  213  (1822)  ;  11  Ind. 
392  (1858);  17  Ind.  10  (1861) 

591  111.  G09  (1879). 

6  3McC.  (S.  C.)  480  (1826). 

^  17  Ind.  10  (1861).  A  mortgage  given  to  secure  the  debtooukl  then 
be  foreclosed.  9  Iowa  39,  114  (1859)  ;  22  lo^va  448  (1867)  ;  68  Iowa 
412  (1886);   19  Kas.  165  (1877). 

093  N.  C.  51   (1885). 


CONTRACTUAL   INTEREST.  13 

for  the  interest  if  it  were  not  so  paid.^  A  case  slightly 
ditierent  from  that  is  one  where  interest  is  to  be  paid  annu- 
ally, but  if  not  so  paid  to  bear  interest.  Such  an  agree- 
ment does  not  give  the  debtor  the  option  of  paying  the 
interest  when  it  is  due  or  adding  it  to  the  principal  as  he 
chooses.^ 

In  Virginia,  the  stipulation  that  if  the  interest  is  not 
paid  when  due  the  principal  shall  immediately  l)ecome  due,^ 
and,  also,  that  back  interest  shall  be  the  penalty  for  not 
paying  punctually,* are  both  relieved  from  in  equity.  Other 
courts  also  generally  grant  relief  from  penalties. 

(cZ)  Effect  of  interest  on  maturity.  A  stipulation  to 
pay  interest  after  maturity,  if  the  note  is  not  then  paid, 
does  not  operate  to  extend  the  time  of  payment  ;^  but  it 
is  to  compel  punctual  payment,  or  to  obtain  compensa- 
tion for  the  delay. ^  Though,  as  a  general  rule,  the  receipt 
of  interest  in  advance  upon  a  note  is,  prima  facie,  a  bind- 
ing contract  to  delay  the  time  of  payment ;  and  no  suit  can 
be  maintained  against  the  maker  during  the  period  for 
which  the  interest  has  thus  been  paid,^  whether  the  rate 
is  the  same  or  not.^ 

The  Kansas  court  holds  that  the  payment  of  interest  in 
advance  beyond  the  time  agreed  on  will  release  a  non-con- 
senting surety  f  but  in  Massachusetts  and  Missouri  it  is 
held  that  such  an  implied  agreement  is  not  sufficient  to 

>  G7  Iowa  676  (1885). 
«  76  Iowa  474  (1888). 

^    5  Munf.  (Va.)  495  (1817).     This  case  was  affected  to  some  extent 
by  statute. 
^  Gil.  (Va.)  172  (1820). 

5  2  Ball  &  B.  (Ire.)  381  (1813)  ;  35  Iowa  582  (1872). 

6  2  Ball  &  B.  (Ire.)  381  (1813). 

7  37  Ga.  384  (18G7);  43  Ind.  163,  393  (1873);  10  N.  H.  318  (1839); 
contra,  57  Mo.  357,  399,  503  (1874). 

8 43  Ind.  163,393  (1873). 
9  22Kas.  363  (1879). 


14  THE    LAW    OF    INTEREST. 

dischiii-o-e  a,  surety^ — to  accomplish  that  there  must  be  an 
express  contract. 

AVhere  a  note  is,  by  its  terms,  made  payable  on  demand, 
and  interest  in  advance  for  a  certain  period  is  paid  at  the 
time  of  making  it,  but  not  indorsed,  oral  evidence  of  a 
contract  for  delay,  made  at  the  time,  cannot  be  admitted, 
as  it  would  contradict  the  written  contract.^ 

Interest  may  be  received  in  advance,  with  a  reservation, 
by  agreement,  of  the  right  to  sue  within  the  time.^ 

The  JNIissouri  court  holds  that  the  payment  of  interest 
after  the  maturity  of  a  note  is  not,  by  itself,  evidence 
of  an  agreement  for  an  extension  of  it  ;*  but  the  taking  of 
a  renewal  note  from  the  principal  debtor  and  receiving  in- 
terest npon  it  from  its  date  to  its  maturity  will  constitute 
such  an  agreement ;  and  will  discharge  the  surety  upon 
it.5 

The  same  court  holds  that  usurious  interest  paid,  or 
agreed  to  be  paid,  in  advance,  will  not  discharge  a  suret}'.^ 

(e)  Effect  of  interest  on  nerjoliability.  Making  a  note 
bear  interest  after  its  maturity  does  not  aflfect  its  negotia- 
bility.^ Neither  does  adding  to  it  a  stipulation  that  if  it 
is  not  paid  when  due  and  a  suit  is  brought  thereon,  the 
maker  will  "pay  ten  per  cent,  on  the  amount  due,"  aflfect  it.^ 

(/)  Alteration.  The  alteration  of  a  material  part  of  a 
contract  renders  it  void.**    Such  an  alteration  must  be  made 

'  138  Mass.  63  (1884)  ;  57  Mo.  357  (1874). 

2  ION.  11.  318  (1839). 

3  37  Ga.  384  (18C7)  ;  10 X.  11.  318  (1839). 

*  57  Mo.  357  (1874). 

*  05  Mo.  502  (1877). 
«57  Mo.  399,  503  (1874). 
^  23  Kas.  402  (1880). 

8  32  N.  E.  Rep.  (111.)  495  (1892). 

8  17  S.  C.  404  (1882).  Adding  the  ■\vord  "paid"  before  "annually," 
•where  a  note  reads  "at  six  per  cent,  annually,"  is  a  material  alteration. 
10  0.  St.  348  (1805). 


CONTRACTUAL   INTEREST.  15 

ill  the  body  of  the  instrument  to  have  thiit  effect.^  A  mem- 
orandum made  on  the  back  of  a  note  that  the  rate  of  in- 
terest shall  be  less,  by  agreement  of  the  maker  and  holder, 
is  not  an  alteration,  and  will  not  release  the  surety,  though 
he  Avere  ignorant  of  the  memorandum.^ 

{g)  Indorsers^  and  guarantors'  liability.  Indorsers 
and  jruarantors  of  bills  and  notes  are  liable  for  the  inter- 
est  on  them  the  same  as  the  drawers  and  makers.^ 

Where  a  note  is  payable  on  time,  with  interest  annually 
till  its  maturity,  and  no  demand  is  made  for  the  annual 
interest  as  it  becomes  due,  or,  if  made,  no  notice  thereof 
is  given  to  the  indorser,  he  if  notified  of  non-payment 
when  the  note  falls  due,  will  be  liable  for  the  whole  amount, 
both  principal  and  interest,  the  interest  being  regarded  as 
incidental  to  the  debt  rather  than  a  part  of  it.*  But  a  suit 
for  such  interest  cannot  be  maintained  against  an  indorser 
before  maturity  of  the  note  unless  proper  demand  therefor 
has  first  been  made  upon  the  maker. ^ 

(7^)  Present  worth.  The  present  worth  of  a  debt  bear- 
ing interest  for  a  definite  period,  and  written  for  the  amount 
loaned,  is  its  face  value.  But  if  a  note  is  written  for  an 
amount  covering  both  principal  and  interest,  or  for  the 
principal  alone,  when  it  carries  no  interest,  the  worth  of 
such  notes  at  any  time  before  their  maturity  can  be  ascer- 
tained by  dividing  the  face  value  of  the  instrument  by  the 
amount  of  one  dollar  for  the  time  to  elapse  before  its  ma- 
turity at  the  rate  of  interest  that  the  note  bears,  and  the 
quotient  will  be  the  value  of  the  instrument  at  that  time.'' 

'  135  Mass.  514  (1883). 

2  131  Mass.  77  (1881). 

3  IGL.  J.,  Exch.  (Eug.)  3  (1846)  ;  16  M.  &  W.  (Eng.)  99  (1846)  ;  2 
Col.  596  (1875)  ;  59  Ga.  840  (1877). 

*  1  Appl.  (Me.)  31  (1841). 

*  24  Atl.  Rep.  (Vt.)  136  (1892). 
6  17  Kas.  518  (1877). 


16  THE    LAW    OF    INTEREST. 

({)  Accrued  interest.  Interest  that  has  accrued  dur- 
ing life  goes  to  the  personal  representatives  of  a  deceased 
person,  who  enjoyed  a  life  interest  in.  the  estate,  and  not 
to  the  remainder-man.^ 

(j)  Apporlionment.  Interest  upon  notes  of  individu- 
als and  incorporated  companies,  whether  secured  or  not, 
accrues  from  day  to  day,  and  when  to  bo  appropriated  to 
income  may  be  apportioned  between  the  days  upon  which 
it  is  stipulated  to  be  paid ;  and  when  received  it  is  to  be 
credited  to  the  income  for  the  time  during  which  it  accrued.^ 
But  this  rule  does  not  apply  to  interest  on  United  States 
bonds,  or  bonds  or  certificates  of  a  state,  county,  city,  town, 
railroad  or  other  public  or  quasi  public  corporation,  in  al)- 
sence  of  statute  or  express  agreement.^ 

(A')  Insolvency.  Contractual  interest  should  be  al- 
lowed against  an  insolvent  estate.*  The  proper  manner 
is  to  add  such  interest  to  the  principal  of  the  debts,  because 
this  interest  is  as  much  due,  and  part  of  the  debt,  as  the 
principal ;  to  allow  the  principal  only  of  debts  not  drawing 
such  interest ;  and  in  cases  of  debts  not  yet  due,  not  bear- 
ino"  interest,  to  make  a  rebate  of  interest  for  the  unexpired 
time  from  the  date  of  the  failure,  commission,^  or  decease 
of  the  insolvent,  as  the  case  may  be.^  If  there  is  a  sur- 
plus of  assets,  it  is  allowed  to  the  creditors  as  interest  for 
the  subsequent  time.^  The  decree  of  the  commissioners  is 
reiT'irded  as  a  judgment,  and  in  granting  the  surplus  as  in- 
terest it  will  be  allowed  upon  the  aggregate  of  principal 

'  87  K}-.  140  (1888)  ;  8  S.  &  R.  (Pa.)  299  (1822). 

«  G  Sp'aukl.  (Me.)  172  (1884)  ;  121  Mass.  178  (187G). 

3  121  Mass.  178  (187G). 

*  Cooke's  B.  L.  (Eng.)  181, 182  :  2  B.  &  Aid.  (Eng.)  305  (1819)  ;  9  La. 
C4,  2G5  (183C). 

*  Cooke's  B.  L.  (Eng.)  535. 

6  2  Bl.  Ch.  (Md.)  376  (1830)  ;  4  Met.  (Mass.)  317  (1842). 
'  Cooke's  B.  L.  (Eng.)  535. 


CONTRACTUAL   INTEREST.  17 

and  interest  together  found  due  by  the  commissioners  and 
not  upon  the  princi[)al  alone. ^ 

In  JNIaryland,  on  judgment  debts  against  an  insolvent 
debtor,  interest  is  allowed  until  the  property  is  sold  to 
pay  debts. ^ 

(?)  How  interest  is  transferred.  The  assignment  of 
the  principal  of  a  debt  carries  the  interest.^ 

{m)  Payment.  A  debtor  is  liable  to  pay  interest  by 
virtue  of  his  contract,  whether  he  made  it  or  not.* 

In  settling  a  debt,  on  which  there  have  Ijeen  no  paj'ments, 
simple  interest  should  be  reckoned  from  the  time  it  began 
to  bear  hiterest  until  the  time  of  settlement  or  rendering  of 
decree.^  For  the  method  of  reckoning  interest  in  partial 
payments,  see  chapter  seven. 

If  an  instalment  of  interest  due  on  a  note  is  paid  by  a 
note  for  the  amount  due,  it  is  a  mere  substitution  of  one 
note  for  another,  and  will  not  generally  be  regarded  as  a 
p.'iyment  of  the  interest,  even  if  it  be  indorsed  on  the  note 
as  paid,  and  the  holder  can  recover  it  on  the  original  note 
even  against  subsequent  incumbrancers  of  the  security,  if 
they  have  not  been  misled  thereby.^  But  if  a  note  bearing 
a  higher  rate  of  interest  than  the  mortjTfasfe  be  cfiven  for  the 
interest  due  on  the  mortgage,  it  will  be  construed  as  a  bind- 
ing agreement  for  forbearance,  and  received  as  payment  it 
will  be  treated  as  such  as  far  as  the  mort£::a<]:e  title  or  lien  is 
concerned.^ 

In  the  absence  of  a  special  agreement  to  that  effect,  in- 

'  65  Ga.  189  (1880). 
2  73  Md.  80  (1890). 
^  08  Tenn.  539  (1873). 

*  1  Dev.  Eq.  (N.  C.)  520  (1830). 

*  80  111.  96  (1875). 

«  16  Conn.  260  (1844), 
T  23  Mich.  224  (1871). 
2 


18  THE    LAW    OF    INTEREST. 

terest  cannot  be  collected  on  partial  prepayments  made  on 
a  contract  i)a3-al)le  on  time,  Avithout  interest  ;^  neither  can 
one  be  coiu[)ellcd  to  receive  a  part  payment  so  as  to  stop 
interest  on  that  part,-  altliough  the  holder  receives  interest- 
l)earing  notes  instead  of  the  money,  at  their  face  value,  no 
credit  being  given  for  the  interest  that  the}'  include.^  This 
is  the  rule  because  the  time  of  payment  is  part  of  the  con- 
tract, and  for  the  benefit  of  both  parties.*  So  if  one  pays 
the  entire  debt  before  it  is  due  he  cannot  have  a  rebate  for 
interest.''  But  where  the  creditor  collects  a  part  of  the 
amount  due  through  legal  proceedings  he  cannot  afterward 
claim  interest  on  that  part  from  the  time  it  is  paid  by  the 
debtor.*^ 

If  the  interest  is  not  paid  when  it  is  dne,  the  security 
can  be  sold  and  payment  obtained  therein-,  if  such  is  the 
agreement.  If  the  mortgagee  is  a  void  corporation,  it  can- 
not foreclose  the  moitgage,  but  a  receiver  can  demand  an  ac- 
counting: for  the  secnrcd  debt.  Sncli  accountinsr  should  be 
with  interest,  after  allowing  all  payments  made  on  the  loan.^ 

So  a  mortgage  can  be  foreclosed  if  interest  is  payable 
annually,  and  is  not  so  paid.^  But  the  foreclosure  of  a 
mortgage  of  land  for  less  than  ten  dollars  interest,  without 
calling  u])on  the  mortgagor  for  payment,  whereby  costs 
arc  made  to  many  times  that  amount,  is  oppressive  and  en- 
titled to  no  favor. ^ 

'  7  Yirg.  (Me.)  70  (1870). 

«  3  Paige  (N.  Y.)  400  (1832)  ;  7  How.  Pr.  (N.  Y.)  U  (1852)  ;  5  O.  2G2 
(1831). 
3  1  Spauld.  (Me.)  233  (1880). 

*  7  Johns.  Ch.  (N.  Y.)  7  (1823). 

*  iGr.  (N.  J.)  171  (1839). 

«  3  Paige  (N.  Y.)  400  (1832)  ;  7  How.  Pr.  (X.  Y.)  44  (1852). 

7  45  Mich.  504  (1881). 

«  44  Mich.  10  (1880). 

»  47  Mich.  100  (1881)  ;  48  Mich.  341  (1882). 


CONTRACTUAL   INTEREST.  19 

Payments  of  interest  made  one  day,  or  even  two  days 
after  they  become  due  are  no  defeasance  of  the  undertak- 
ing, if  the  creditor  accepts  them  without  objection.^ 

In  foreclosing  a  mortgage  for  an  instalment  only,  where 
the  whole  sum  is  not  due  and  the  court  orders  tlie  sale  of 
the  whole  property,  no  interest  should  be  allowed  beyond 
the  time  when  the  proceeds  should  become  applicable 
to  the  payment  of  subsequent  instalments  not  then  due.^ 
If  the  payment  of  the  mortgage  is  delayed  by  litigation, 
interest  continues  to  run  till  the  date  of  the  judgment.^ 

The  court  will  order  a  debtor  to  pay  the  C(^ntractual 
rate,  although  his  lands  are  in  the  hands  of  a  receiver  at 
the  creditor's  instance.'^ 

Where  a  note  secured  l)y  mortgage  is  indorsed  with  an 
agreement  to  pay  a  higher  rate  of  interest  in  the  future  it 
is  a  mere  personal  undertaking,  and  the  mortgage  is  good 
only  for  the  rate  originally  agreed  upon  as  against  third 
parties  f  between  the  mortgagor  and  mortgagee,  however, 
the  land  is  charged  with  the  now  agreement.^  So,  a  more 
general  rule  is,  that  property  sul)ject  to  a  mortgage  for 
principal  and  interest  due  under  one  contract  is  not  sub- 
ject to  interest  growing  out  of  a  subsequent  agreement  for 
the  payment  of  the  mortgage.^ 

When  a  deed  says  that  the  land  is  free  of  all  incum- 
brances except  a  mortgage  for  a  certain  sum  named,  inter- 
est due  and  to  become  due  on  the  mortgage  note  is  included 
by  the  law.^ 

»  1  Russ.  &  M.  (Eng.)  178  (1830). 

"  8Blf.  (Ind.)  4G5  (1847). 

=*  77Io\vaG99  (1889). 

*  83  Va.  715(1887). 

"  31  Mich.  2G5  (1875)  ;  45  Mich.  253  (1881) 

«  34  Mich.  302  (187G). 

'  5  Mart.,  N.  S.  (La.)  207  (1826). 

«  130  Mass.  460  (1881). 


20  THE    LAW    OF   INTEREST. 

If  a  mortgagee  stipulates  to  pay  interest  on  certain  ddots, 
he  must  pay  the  interest  from  the  date  of  the  mortgage,  and 
not  from  the  time  the  debts  become  or  will  become  due.^ 

"Post-due  interest"  is  interest  which  has  matured  and  is 
collectible. 2 

(n)  Tlie  governing  lcm\  The  law  in  force  when  the 
contract  is  made  governs  as  to  the  rights  of  parties  relat- 
ing to  contractual  interest.^  As  to  which  hiw  governs 
Avhen  a  contract  is  made  in  one  jurisdiction  and  is  to  be 
performed  in  another,  see  chapter  nine. 

II.    I3irLIED   CONTRACTS    FOR   INTEREST. 

An  implied  contract  for  interest  arises  when  the  parties 
make  no  express  agreement  for  interest,  l)ut  from  tlie  cir- 
cumstances the  law  infers  that  thoy  contracted  in  reference 
to  a  tacit  understanding  between  them.  Such  contracts 
may  arise  in  several  ways. 

(«)  Previous  dealings.  A  promise  to  pay  interest  may 
1)0  implied  from  previous  dealings  between  the  parties.* 
So  may  the  rate  be  thus  implied.^  But  where,  by  express 
agreement,  more  than  the  legal  rate  has  been  paid  two  or 
three  times  only  there  is  no  implication  that  such  rate 
is  to  be  paid  in  the  future.^  Where  one  purchased  goods 
!it  more  than  the  legal  rate  of  discount  from  time  price 
for  cash,  in  rescission  of  the  sale  he  cannot  claim  interest 
at  that  rate.^ 

•  14  Iowa  22  (1862). 

«  12  i\ro.  App.  2G1  (1882). 

a  17  Neb.  491  (1885).     See  Chapter  nine. 

*  5  Geo.  (Miss.)  528  (1857). 

0  1  Campb.  (En-.)  50  (1807)  ;  3  Wash.  (U.  S.,  C.  C.)  350  (1818)  ;  33 
Ala.  459  (1859)  ;  Kirby  (Conn.)  207  (1787) ;  39  111.  307  (180(3) ;  8  Iowa 
163  (1859) ;  2  Pen.  (N.  J.)  548  (1809)  ;  4  Wend.  (N.  Y.)  483  (1830)  ;  50 
Wis.  628  (1880)  ;  contra,  13  Tex.  279  (1855). 

8  8  Cal.  522  (1857)  ;  3  Hun  (N.  Y.)  254  (1874). 

'  5  Bob.  (La.)  5  (1843). 


CONTRACTUAL   INTEREST.  21 

(6)  General  usage.  An  implied  contract  to  pay  inter- 
est may  be  inferred  from  the  usaires  of  the  trade  irovernino- 
the  busmess  in  which  both  parties  are  engaged.^  Also, 
where  parties  have  been  accustomed  to  pay  and  receive 
interest  upon  such  or  simihir  securities. ^  So  an  agreement 
to  pay  interest  on  a  running  account  for  goods  sold  may 
be  inferred  from  the  course  of  dealings  between  the  par- 
ties, where  it  is  the  usage  of  the  merchants  iu  the  neigh- 
borhood, and  the  practice  of  the  creditor,  to  charge  inter- 
est in  such  cases ;  and  this  was  known  to  the  debtor  at  the 
time  of  the  dealing.^ 

If  a  merchant  is  in  the  general  practice  of  charging  in- 
terest to  his  customers,  after  a  limited  period  of  credit, 
those  who  deal  with  him  with  knowledge  of  it  are  bound 
to  pay  interest  ;*  but  knowledge  by  the  purchaser  of  such 
a  practice  will  not  be  presumed.^ 

(c)  Admission.  If,  in  an  account  stated,  a  party  charges 
himself  with  interest  at  a  certain  rate  it  will  imply  a  prom- 
ise to  pay  interest  at  that  rate.*'  So,  if  a  debtor  gives  his 
bond  for  such  an  account,  he  will  be  bound  by  it.^ 

{d)  AcceiHance  of  accounts.  The  rate  per  cent  may 
be  established  by  acceptance,  without  objection,  of  accounts 
rendered,  in  which  the  implied  rate  is  charged.^ 

»  39  111.  307  (1866)  ;  1  Dall.  (Pa.)  315  (1788);  3  W.  &  S.  (Pa.)  271 
(1842). 

=>  2  Campb.  (Eng.)  486,  n.  (1810) ;  1  Rose  (Eng.)  399  (1813) ;  1  Stark. 
(Eng.)  487  (1816) ;  4  C.  &  P.  (Eng.)  124  (1830).  And  this  rule  is  ex- 
tended even  to  an  implied  promise  to  pay  interest  upon  interest,  when 
it  has  been  paid  for  a  considerable  length  of  time  upon  a  consolidated 
sum  of  principal  and  interest.     1  Ball  &  B.  (Ire.)  375  (1810). 

3  1  Barb.  (N.  Y.)  235  (^1847)  ;  3  N.  Y.  (3  Comst.)  502  (1850)  ;  1  Dall. 
(Pa.)  315  (1788). 

*  4  Wend.  (N.  Y.)  483  (1830) ;  8  Wend.  (N.  Y.)  109  (1831). 

^  1  Barb.  (N.  Y.)  235  (1847). 

6  21  Neb.  605  (1887). 

^  2  Desau.  (S.  C.)  623  (1808). 

85  Geo.  (Miss.)  528  (1857). 


CHAPTER  III. 

INTEREST  ALLOWED  AS  DAMAGES. 

IN  the  preceding  chapter  was  explahied  the  difference  be- 
tween contractual  interest  and  interest  allowed  by  the 
law  as  damages  in  the  absence  of  a  contract  to  pay  it.  In 
this  chapter  will  be  treated  the  principles  of  law  govern- 
ing the  last-named  division. 

In  ancient  times,  parties  could  not  even  make  agreements 
for  the  payment  of  interest,  and  it  was  long  after  such  con- 
tracts began  to  be  regarded  as  legal  that  the  courts  were 
willing  that  interest  should  be  given  as  damages  for  the  de- 
tention of  a  debt  in  any  case,  unless  there  was  an  express 
a2:reement  therefor.  Now,  in  the  United  States,  interest  is 
very  freely  allowed,  but  in  England  the  practice  is  much 
narrower.  There  is  a  feeling  against  allowing  interest  as 
damaijes,  because  the  creditor  is  dilatory  in  not  bringing 
an  action  to  recover  his  debt.  This  has  given  rise  in  Eng- 
land to  an  idea  that  the  creditor  ought  to  try  to  collect  his 
debt  before  he  is  given  interest  on  it,  which  influences  the 
decisions  of  the  courts  there  to  a  consideral)le  degree.' 
That  is,  they  regard  interest  as  real  damages.^  This  is  true, 
without  regard  to  the  form  of  the  debt,  whether  it  is  a  con- 
tract bearing  interest,  or  otherwise.^ 


'  2  B.  &  Aid.  (Eug.)  305  (1819)  ;  M.  &  M.  (Eng.)  228  (1828). 

2  GO  Ala.  147  (1831). 

3  2  C.  &  P.  (Eug.)  88  (1825)  ;  3  Bing.  (Eug.)  353  (1826). 

(22) 


INTEREST   ALLOWED   AS   DAMAGES.  lo 

Interest  is  allowed  either  of  course  on  certain  claims,  or 
because  of  the  conduct  of  the  parties.^  But  no  contract 
bears  interest  before  it  is  due  and  payable,  except  by  ex- 
press agreement.^ 

Interest  allowed  as  damages  is  regarded  as  such  and  not 
as  interest,^  and  it  is  the  only  damage  allowed  by  the  com- 
mon law  for  the  detention  of  a  debt.'*  It  will  generally  not 
•be  denied  if  it  does  not  appear  that  either  party  should  be 
punished.^  In  some  states  it  must  be  assessed  as  damages,'' 
and  thouo-h  it  is  then  called  "interest"  it  is  not  a  material 
erroi-.^ 

Some  courts  hold  that  interest  as  damages  is  entirely  a 
creature  of  statute,^  and  that  if  the  statute  of  the  state 
does  not  allow  it  the  courts  cannot  give  it ;  and  there  is 
certainly  much  reason  for  the  position,  as  at  the  old  com- 
mon law  even  express  contracts  for  interest  were  not  al- 
lowed, and  later  it  was  allowed  where  there  was  an  express 
contract  to  pay  it,^  and  as  damages  only  in  those  cases  au- 
thorized by  statute.  But  the  courts  soon  made  it  a  matter 
of  common  law,  and  to-day  in  nearly  every  jurisdiction  it 
is  allowed  where  it  is  deemed  proper  under  and  by  virtue 
of  precedents  that  have  been  slowly  established.  In  Iowa, 
the  practice  is  so  broad  that  interest  is  chargeable  upon  all 
debts  unless  there  is  a  contract  between  the  parties  to  the 
contrary  ;^°  and  parties  can  agree,  even  orally,  that  a  debt 

'  3Binn.  (Pa.)  295  (1811). 

*  C-i  Tex.  94  (1885)  ;  1  H.  &  M.  (Va.)  211  (1807). 
3  2  Col.  70  (1873). 

*  12  Cal.  107  (1859). 

*  51  N.  W.  Kep.  (Mich.)  356  (1892). 
6  2Zab.  (N.J.)  424  (1850). 

'  38  Mich.  172  (1878). 

8  66  Ind.  1  (1879) ;  3  Cush.  (Miss.)  95  (1852)  ;  3  Tenu.  268  (1S13) ; 
42  Tenn.  378  (18G5)  ;  2  Tex.  232  (1847)  ;  37  Tex.  315  (1872). 

9  1  Scam.  (111.)  167  (1832)  ;  13  111.  544  (1852)  ;  86  111.  384  (1877). 
1"  63  Iowa  275  (1884)  ;  67  Iowa  654  (1885). 


24  THE    LAW    OF    INTEREST. 

shall  not  benr  interest  after  it  is  due.^  It  is  allowed  in  ac- 
tions of  contract-  much  more  freely  than  in  tort,^  l)ecause 
in  the  latter  claims  the  amount  due  is  generally  uncertain. 

The  right  to  interest  as  damages,  rests  upon  default  in 
payment,  and  not  the  use  of  the  money  due  ;*  and  it  makes 
no  difference  whether  that  which  is  due  is  money  or  chat- 
tels,^ or  whether  it  is  due  under  an  implied  or  express  con- 
tract.'^ If  it  is  a  contract  to  deliver  chattels,  the  amount 
of  money  represented  by  the  chattels  is  the  amount  due.'^ 

If  payment  is  dela^^ed  by  circumstances  over  which  the 
debtor  has  no  control,  as  when  a  debt  is  garnished  or  trus- 
teed, he  is  not  chargeable  with  interest  during  such  period 
of  inability.^     So  when  debtor  dies.^ 

In  discretion  of  jury.  In  England,  the  jury  are  allowed 
to  give  damages  for  the  unjust  detention  of  a  debt,  due 
diligence  to  collect  it,  on  the  part  of  the  creditor,  having 
first  been  shown ;  and  the  court  can  order  Avhat  rate  it 
thinks  is  just.^° 

In  the  United  States,  there  are  a  few  instances  where 
courts  have  allowed  the  jury  the  privilege  of  giving  inter- 
est in  certain  cases,  at  their  discretion.  These  are  among 
those  cases  where  there  is  no  usage,  no  precise  time  of 
payment  fixed,  no  account  rendered  and  no  demand  made." 

>  79  Ky.  277  (1881). 

2  1  Utah  55  (1871). 

3  7  Mart.  (La.)  710  (1820). 

•»  5  Cow.  (N.  Y.)  331  (1826),  587  (1825)  ;  G  Binn.  (Pa.)  159  (1813). 

'"  3  McC.  (S.  C)  498  (1826).  Co««ra,  no  interest  is  allowed  on  costs  of 
a  jnd^'mcnt  payable  in  tobacco.     2  Brev.  (S.  C.)  99  (1806). 

<5  3  McC.  (S.  C.)  498  (1826). 

7  .-^2  ra.  St.  363  (1866). 

«  1  Jones  (Ire.)  51  (1834). 

»  2  K.  I.  558  (1850). 

'0  43L.  J.,Cli.  (Eng.)855  (1874);  7  L.  R.,  II.  L.  Cas.  (Eug.)  27  (1874). 
SeeBunb.  (Eng.)  119  (1722). 
"  2  S.  &R.  (ra.)  393  (1825). 


INTEREST    ALLOWED    AS    DAMAGES.  25 

111  Kentucky  and  Maryland,  it  is  in  the  discretion  of  the 
jiny,  free  from  the  intervention  of  the  court. ^  In  Wiscon- 
sin, the  jury  are  allowed,  in  their  discretion,  to  give  interest 
from  the  beginning  of  the  action  on  damages  to  personalty. ^ 
The  court  in  Tennessee  holds,  that  in  some  cases  a  verdict 
for  interest  by  way  of  damages,  when  the  law  allows  none, 
should  not  be  set  aside.^  So,  the  courts  in  New  York  and 
Utah  will,  under  certain  circumstances,  allow  the  jury,  in 
their  discretion,  to  give  mterest.* 

There  are  certain  well  established  principles,  however, 
which  govern  in  the  great  mass  of  decisions,  to  wit:  1. 
The  amount  due  must  be  certain  ;  2.  The  time  when  it  is 
due  must  be  certain  ;  and,  3.  The  amount  due  and  time 
of  payment  must  be  known  to  the  delator. 

1.  The  amount  due  must  he  certain.  The  old  com- 
mon law  requires  that  the  debt  l)e  liquidated,  or  its  amount 
be  ascertained,  before  interest  will  be  allowed;^  but  the 
rule  has  been  so  far  modified,  that  if  the  amount  is  capable 
of  being  ascertained,  that  is  to  say,  by  calculation,^  or 

»  1  Mar.  (Ky.)  43  (1817)  ;  1  Lit.  (Ky.)  358  (1822)  ;  3  Mon.  (Ky.)  3G9 
(1826) ;  3  J.  J.  Mar.  (Ky.)  306  (1830)  ;  4  J.  J.  Mar.  (Ky.)  244  (1830)  ; 
59  McL  131  (1882). 

2  34  Wis.  139  (1874). 

3  1  Tenu.  106  (1799)  ;  3  Tenn.  447  (1813)  ;  24  Tenn.  103  (1844\ 

*  1  Johns.  (N.  Y.)  315  (1806)  ;  2  Utah  230  (1878).  Generally  these 
are  cases  that  arise  ex  delicto. 

*  44  Cal.  239  (1872)  ;  57  Cal.  356,  C41  (1881)  ;  63  Cal.  503  (1883)  ;  76 
Cal.  60  (1888)  ;  56  Ga.  350  (1876)  ;  3  Gilra.  (111.)  626  (1846)  ;  82  111.  134 
(1876)  ;  2  Blf.  (lud.)  312  (1830)  ;  Hardin  (Ky.)  527(1808) ;  1  Bibb  (Ky.) 
326,  443  (1809)  ;  1  Mar.  (Ky.)  580  (1819)  ;  11  Bush  (Ky.)  50  (1874)  ;  5 
Mart.  (La.)  388  (1818)  ;  6  Mart.  (La.)  689  (1819)  ;  13  La.  371  (1839)  ; 
139  Mass.  372  (1885)  ;  8  Mo.  41  (1843)  ;  4  Nev.  437  (1868)  ;  7  Wend.  (N. 
Y.)  109  (1831)  ;  12  How.  Tr.  (X.  Y.)  523  (1856)  ;  7  Lans.  (N.  Y.)  381 
(1873)  ;  125  N.  Y.  237  (1891)  ;  1  Dall.  (Va.)  265  (1788)  ;  29  Pa.  St.  360 
(1857)  ;  1  McC.  (S.  C.)  449  (1821) ;  Harp.  (S.  C.)  274  (1824)  ;  2  Speer 
(S.  C.)  594  (1844) ;   1  Tex.  102  (1846)  ;  2  Hen.  &  M.  (Va.)  603  (1808). 

«  20  N.  Y.  463  (1859)  ;  1  Abb.  Pr.,  N.  S.  (N.  Y.)  121  (1865)  ;  50  Barb. 
(N.  Y.)  62  (1867)  ;  44  Wis.  458  (1878). 


26  THE  LAW  OF  INTEREST. 

determined  by  reference  to  ordinary  market  rates  ^  it  will 
carry  interest.  A  claim  should  be  regarded  as  liquidated 
when  rendered  if  no  objections  arc  made  to  it  within  a 
reasonable  time,^  or  after  the  time  the  debtor  promises  to 
pay  it  if  he  accepts  the  bill.^  It  is  not  necessary  at  com- 
mon hiw  that  the  account  1)C  put  into  writing  to  liquidate  it.* 
A  dis})uted  claim  is  liquidated  when  a  certain  sum  is  agreed 
to  be  due.'^  So,  a  memorandum  check  given  in  settlement 
of  accounts  and  for  immediate  payment  bears  interest.*^ 

When  there  is  no  contract,  usage,  time  fixed  for  pay- 
ment, or  account  rendered,  it  is  not  usual  to  allow  interest.^ 

An  unliquidated  account  will  not  l)ear  interest^  until 
suit  is  brought  to  recover  it,  that  is,  from  the  date  of 
the  writ,''  unless  there  is  an  express  or  clearly  implied 
acreement  that  it  shall  do  so.^'^     The  court  in  Wisconsin 


^  20   N.  Y.  463  (1859)  ;  50  Barb.   (N.  Y.)  G2  (18G7). 
*3  1lob.  (La.)  3G1  (1842);  15  Johns.   (N.  Y.)  409(1818);  7  Wend. 
(N.  Y.)  441  (1831);  121  N.  Y.  230  (1890). 
3  08  Wis.  312  (1887). 

*  2  Kelley  (Ga.)  370  (1847). 

*  35  Barb.  (N.  Y.)  282  (1861).  A  bona  fide  dispute  as  to  tlie  amount 
of  the  debt  is  no  bar  to  accruing  of  interest.     108  Pa.  St.  55  (1884). 

6  10  Rich.  Eq.  (S.  C.)  441  (1859). 

7  3Harr.  (Del.)  528  (1843). 

s  4G  Mich.  193  (1881)  ;  53  Mich.  421  (1884)  ;  3  Cow.  (N.  Y.)  393  (1824)  ; 
5  Cow.  (N.  Y.)  587  (1825)  ;  7  Wend.  (N.  Y.)  178  (1831)  ;  ION.  Y.  (6  Seld.) 
189  (1854);  17  Barb.  (N.  Y.)  454  (1854);  20  N.  Y.  463  (1859);  50 
Barb.  (N.  Y.)  62  (1867);  3  Hun  (N.  Y.)  218  (1874);  GO  N.  Y.  106 
0875)  ;  GHun  (N.  Y.)  475  (1876)  ;  22  Ilun  (N.  Y.)  412  (1880)  ;  123  X.  Y. 
291  (1890)  ;  125  N.  Y.  237  (1891)  ;  2  Speer  (S.  C.)  536  (1844)  ;  30  S.  C. 
305  (1888)  ;  32  S.  C.  57  (1889)  ;  2  Call  (Va.)    358  (1800). 

9  39  Cal.  C62  (1870)  ;  46  Conn.  586  (1879)  ;  61  Iowa  693  (1883)  ;  3  Rob. 
(La.)  361  (1842)  ;  3  La.  Ann.  88,  562  (1848) ;  12  Pick.  (Mass.)  547  (1832)  ; 
9  Gray  (lALass.)  237  (1857)  ;  13  Allen  (Mass.)  326  (18G6) ;  47  Mich.  499 
(1882) ;  62  N.  Y.  316  (1875)  ;  39  Ilun  (N.  Y.)  303  (188G)  ;  46  Ilun  (N. 
Y.)  258  (1887)  ;  4  Dall.  (Pa.)  463  (1806)  ;  5  Rich.  (S.  C.)  295  (1852)  ; 
1  Wash.  (Va.)  172  (1793)  ;  37  Wis.  149  (1875)  ;  51  Wis.  407  (1881)  ;  60 
Wis.  240  (1884). 

10  53  Mich.  421  (1884). 


INTEREST    ALLOWED    AS    DAMAGES.  27 

holds  that  interest  is  not  recoverable  on  any  unliquidated 
demand  previous  to  the  finding  of  the  jury/  because  the 
amount  due  is  not  fixed  before  that  time.  The  court  in 
South  Carolina  once  held  the  same  view,  but  long  since 
adopted  the  prevailing  one.^  The  court  in  Louisiana  rather 
leans  against  the  allowance  of  interest  where  the  amount 
due  is  uncertain.  In  some  cases  it  has  held  that  interest 
should  not  be  allowed  until  judgment  ;^  in  others,  that  it 
should  not  be  allowed  even  after  judgment  ;*  and  again  that 
interest  in  snch  cases  should  be  left  to  the  discretion  of  the 
court.  ^ 

If  property  sold  must  be  first  appraised  in  order  to  find 
the  sum  due,  interest  will  run  from  the  time  of  the  ap- 
praisal only.''  But,  in  cases  where  the  debtor  is  to  fix  the 
amount,  and  he  is  in  default  for  not  having  taken  the  req- 
uisite steps,  interest  is  allowed  from  the  time  of  the  defiiult.^ 

2.  TJie  time  when  the  debt  is  due  must  he  certain.  Inter- 
est is  generally  allowed  where  it  is  the  legal  duty  of  the 
debtor  to  pay  over  money,  deliver  property,  or  perform 
service,  without  a  previous  demand,  from  the  time  of  de- 
fault.^ This  is  true  even  if  the  duty  to  pay  without  a  de- 
mand is  an  implied  one.^  The  fiict  that  the  right  to  sue  is 
indefinitely  postponed  beyond  maturity  does  not  afi'ect  the 

>  44  Wis.  458  (1878)  ;  55  Wis.  271  (1882). 

2  2  Bay  (S.  C.)  233  (1790). 

3  6  La.  Ann.  569  (1851). 

"4  La.  128(1832);  7  La.  131,  365  (1834),  596  (1835);  8  La.  569  (1835)  ; 
11  La.  236  (1837).  See  1  La.  Ann.  382  (1846). 

5 3  La. 140,  149  (1844), 

6  128  111.  88  (1889). 

■>  20  N.  Y.  463  (1859)  ;  50  Barb.  (N.  Y.)  62  (1867). 

8  3  Harr.  (DeL)  528  (1843)  ;  82  111.  134  (1876)  ;  9  Pick.  (Mass.)  368 
(1830)  ;  1  Johns.  (N.  Y.)  276  (1806)  ;  4  WeucL  (N.  Y.)  313  (1830)  ;  6 
Barb.  (N.  Y.)  643  (1848)  ;  5  Den.  (N.  Y.)  135,  470  (1848)  ;  2  N.  Y.  (2 
Comst.)  141  (1849)  ;  11  N.  Y.  (1  Kern.)  80  (1850)  ;  108  Pa.  St.  55 
(1884);  4McC.  (S.  C.)  59  (1826).  The  court  in  12  Mart.  (La.)  365 
(1822)  says  that  interest  is  generally  clue  from  judicial  demand  only. 

99  Pick.  (Mass.)  308  (1830);  152  Mass.  141  (1890). 


28  THE    LAW    OF   INTEREST. 

riirht  to  recover  interest  from  the  time  the  debt  is  due.^ 
Sou  cash  sale  will  bear  interest  from  the  day  of  sale, 
though  the  day  of  payment  may  be  postponed  until  a  par- 
ticular event  transpires.^  If  a  conveyance  is  to  l)o  made 
before  the  money  is  paid,  interest  will  run  from  the  time  the 
conveyance  is  made.^  So,  on  a  contract  to  pay  a  stipula- 
ted sum  for  work  to  be  done,  interest  is  allowed  from  the 
time  the  work  is  finished.* 

Interest  as  damages  generally  begins  to  run  from  the 
time  when  the  debt  is  due  and  payable.^  This  is  true  at 
both  law  and  equity.^  The  converse  of  this  rule  is  also 
true,  that  when  a  liquidated  sum  is  unjustly  withheld  it 
bears  interest  from  the  time  it  began  to  be  so  withheld.^ 
So,  in  an  agreement  to  pay  by  instalments,  interest  runs  on 
each  instalment  from  the  time  it  becomes  due  ;^  and  it  is 
allowed  from  the  time  an  agreement  on  the  part  of  the 
payor  is  fully  carried  out ;  as  on  the  consideration  of  a  con- 
tract not  to  object  to  the  probate  of  a  will,  when  it  will 
run  from  the  day  the  will  is  proved.^     When  a  definite  sum 


»  11  Rich.  (S.  C.)  125  (1857). 

2  2G  Ga.  465  (1858). 

3  24Ind.  299  (1SG5). 

*  5  Rich.  (S.  C.)  295  (1852)  ;  7  Rich.  (S.  C.)  124  (1854). 

*  2  B.  &  r.  (Eng.)  337  (1800) ;  5  Ves.  (Eng.)  801  (1801)  ;  Coop. 
(Eng.)  29  (1805)  ;  17  Ves.  (Eug.)  27  (1810)  ;  2  Port.  (Ala.)  451  (1835)  ; 
22  Ala.  343  (1853)  ;  25  Ala.  152  (1854)  ;  64  Ala.  210  (1879)  ;  67  Ala.  253, 
310  (1880)  ;  19  Arls.  16  (1857),  690  (1858)  ;  69  111.  521  (1873)  ;  74  111.  158 
(1874)  ;  3  Mart.,  N.  S.  (La.)  185  (1824)  ;  6  La.  727  (1834)  ;  2  Rob.  (La.) 
471  (1842)  ;  4  Minn.  528  (1860)  ;  35  Mo.  App.  511  (1889)  ;  2  Dutch.  (X. 
J.)  398  (1857)  ;  9  Vr.  (N.  J.)  531  (1875)  ;  Bat.'s  Mart.  &  2d.  llay'il  (X. 
C.)  185,  191,  207  (1798)  ;  22  O.  St.  372  (1872)  ;  64  Pa.  St.  411  (1870)  : 
66  Pa.  St.  132  (1870);  130  Pa.  St.  37  (1889);  2  Speer  (S.  C.)  594 
(1844)  ;  34  Vt.  2  (1861)  ;  37  Vt.  285  (1864)  ;  53  Wis.  188  (1881). 

6  5  Ves.  (Eng.)  801  (1801)  ;  17  Ves.  (Eng.)  27  (1810)  ;  64  Ala.  210 
(1879)  ;  67  Ala.  253,  310  (1880). 
'  64  Pa.  St.  411  (1870). 

«  3  Ves.  (Eng.)  133  (1796)  ;  78111.  440  (1875)  ;  37  Mich.  402  (1877). 
»  35  Barb.  (X.  Y.)  282  (1861). 


INTEREST    ALLOWED   AS   DAMAGES.  29 

is  to  be  paid  out  of  the  proceeds  of  a  certain  mine,  interest 
is  allowable  at  the  expiration  of  a  reasonable  time  if  work 
is  not  commenced  ;^  and  "where  a  note  is  made  payable  "in 
January,"  interest  thereon  will  not  run  until  the  month  has 
entirely  elapsed.^ 

If  no  time  of  payment  is  fixed,  interest  will  run  from 
demand.^  The  Massachusetts  court  recently  decided  that 
Avhere  the  defendant  agreed  to  pay  the  plaintiff  a  yearly 
salar}',  but  no  time  was  fixed  for  its  payment,  interest 
could  not  be  recovered  until  payment  was  demanded.*  So, 
where  a  mandamus  is  granted  for  payment  of  a  school  order, 
when  it  is  such  a  settled  demand  as  would  sustain  a  recov- 
ery of  interest  at  law.^  Also,  where  by  mutual  mistake 
of  parties  the  whole  sum  due  has  not  been  paid  at  settle- 
ment, or  too  much  has  been  received,  interest  on  the  amount 
not  paid  or  overpaid  is  recoverable  from  demand  only,  un- 
less it  was  taken  or  retained  unjustly.^  It  is  a  well  settled 
rule  in  Virginia,  that  when  no  day  of  maturity  is  named 
in  a  bond  or  note  given  for  the  payment  of  a  debt,  it  is  due 
and  payable  on  the  day  of  its  date,  and  bears  interest  from 
date,  though  no  interest  be  reserved.^  Also,  in  Texas,  it 
is  held  that  interest  should  run  from  delivery  of  the  note 
if  no  time  is  fixed  for  payment.^ 

'59  Cal.  484  (1881);  20  Miun.  527  (1874). 

2  2  Mar.  (Ky.)  267(1820). 

=  5  Ves.  (Ens.)  801  (1801)  ;  17  Ves.  (Eng.)  27  (1810)  ;  1  Hodges  (Eng.) 
251  (1835)  ;  2  Bing.  N.  C.  (Eug.)  167  (1835)  ;  2  Scott  (Eug.)  334  (1835)  ; 
4  L.  R.  Eq.  (Eng.)  250  (1867)  ;  36  L.  J.,  Ch.  (Eng.)  806  (1867)  ;  71  Ala. 
145  (1881) ;  19  Ga.  537  (1856)  ;  15  Pick.  (Mass.)  500  (1834) ;  9  Gray 
(Mass.)  401  (1857)  ;  47  Mich.  499  (1882)  ;  03  Mich.  79  (1886)  ;  54  N.  W. 
Rep.  (Neb.)  308  (1893)  ;  20  N.  Y.  9  (1859)  ;  1  Dall.  (Pa.)  52  (1781)  ;  4 
Dall.  (Pa.)  289  (1803)  ;  51  N.  W.  Rep.  (Wis.)  319  (1892). 

*  32  N.  E.  Rep.  (Mass.)  663  (1892). 

*  51  Mich.  184  (1883). 

6  51  Pa.  St.  465  (1866). 

7  28  Grat.  (Va.)  840  (1877)  ;  87  Va.  599  (1891). 
«  13  Tex.  316  (1855). 


30  THE    LAAV   OF  INTEREST. 

Claims  payable  on  demand.  On  claims  payable  on  de- 
mand, interest  is  allowable  from  and  after  a  demand,^  the 
service  of  the  writ  in  a  suit  brought  to  recover  the  debt 
beinsf  such  a  demand.-  Part  navment  of  a  demand  note  is 
equivalent  to  a  demand.^  A  check  is  deemed  to  be  pay- 
able on  demand  so  far  as  its  bearing  interest  is  concerned.* 
But  a  debtor  cannot  claim  that  interest  should  not  be  al- 
lowed prior  to  demand,  when  he,  b}'  absenting  himself,  or 
otherwise,  prevents  a  demand  being  made.^ 

Credit.  Interest  as  damages  never  begins  to  run  until 
the  principal  sum  is  due  and  payable.  There  must  be  a 
real  default  tirst.^  Therefore,  if  any  credit  is  given,  the 
claim  does  not  bear  interest  until  the  time  of  credit  expires.^ 
If  credit  is  given,  but  its  length  cannot  be  proven,  interest 
can  I)e  recovered  only  from  and  after  a  demand,^  or,  from 

1  G  Mod.  (Eng.)  138  (1705)  ;  Miuor  (Ala.)  417  (182G)  ;  5  Conn.  222 
(1824)  ;  71  Iowa  92  (1887)  ;  2  Bibb  (Ky.)  471  (1811)  ;  4  Bibb  (Ky.)  246 
(1815) ;  1  Mar.  (Ky.)  06  (1817)  ;  1  Hon.  (Ky.)  209  (1824)  ;  6  Dana  (Ky.) 
7  (1837)  ;  9  La.  444  (1836)  ;  12  Mass.  4  (1815) ;  15  Pick.  (Mass.)  500 
(1834)  ;  1  Met.  (Mass.)  112  (1840)  ;  138  Mass.  151  (1884)  ;  12  N.  H.  474 
(1841) ;  3  N.  J.  L.  (2  Pen.)  419  (1808)  ;  Baf  s  Mart.  &  2d  llay'd  (N.  C.) 
191,  207  (1798)  ;  Add.  (Pa.)  137  (1793)  ;  IG  S.  &  R.  (Pa.)  2G4  (1827)  ;  1 
McC.  (S.  C.)  370  (1821)  ;  2  Bail.  (S.  C.)  27G  (1831)  ;  28  Vt.  135  (1855)  ; 
2  W.  Va.  332  (1867)  •  contra,  1  Campb.  (Eng.)  50  (1807)  ;  18  Ala.  300 
(1850). 

-  18  Ala.  300  (1850)  ;  38  Iowa  325  (1874)  ;  2  Bibb  (Ky.)  471  (1811)  ; 
4  Bibb  (Ky.)  246  (1815)  ;  1  Mon.  (Ky.)  209  (1824)  ;  1  Met.  (Mass.)  112 
(1840)  ;  12  N.  II.  474  (1841)  ;  11  Wcud.  (N.  Y.)  477  (1833)  ;  cuntra,  1 
Mart.,N.  S.  (La.)  130  (1823). 

3  15  Iowa  279  (1863). 

■>  122  Ind.  554  (1889). 

*  2Keyes  (N.  Y.)  21  (1865). 

«  3  La.  Ann.  338  (1848)  ;  19  La.  Ann.     209  (1867). 

7  4  Ilarr.  (Del.)  130  (1844)  ;  5  Mart.  (La.)  300  (1818) ;  3  Mich.  560 
(1855)  ;  50  N.  W.  Kep.  (Neb.)  265  (1891)  ;  30  N.  II.  511  (1855)  ;  8  Vt. 
258  (1836);  22  Vt.  191(1850).  The  Louisiana  court  says,  that  there 
must  be  a  demand  upon  the  debtor  to  make  him  liable  for  interest.  8 
Rob.  (La.)  207  (1844)  ;  1  La.  Ann.  325  (184G). 

8  3  Mich.  560  (1855);  30  N.  11.511  (1855). 


INTEREST   ALLOWED   AS   DAMAGES.  31 

the  beginning  of  tlie  suit  brought  to  recover  the  clebt.^  The 
time  of  credit  can  be  stipulated,  or  it  can  be  presumed  from 
the  custom  of  the  trade  or  region.^  In  the  Massachusetts 
case  of  Bromfieldv.  Little^  decided  in  1764,  it  was  held 
that  there  was  at  that  time  no  custom  of  merchants  in  this 
province  to  charge  interest  after  a  year  on  the  price  of  goods 
sold,  which  would  raise  an  implied  contract  to  pay  the  same. 
The  chief-justice  said:  — 

"This  case  is  of  mucli  importance  to  tlie  community.  'Tis  agreeable 
to  natural  equity  tliat  interest  sliould  be  allowed;  and  I  am  glad  it  is 
growing  into  a  custom ;  but  the  rule  is  that  both  parties  ought  at  the 
time  of  coutracthig  to  understand  it  so,  and  I  doubt  whether  it  is  so 
general  as  that  it  can  be  supposed  in  this  case." 

The  courts  of  Maine  are  decidedly  opposed  to  limiting 
the  length  of  credit  by  custom.  In  the  case  of  Amee  v. 
Wilson^,  decided  there  in  1842,  interest  was  not  allowed 
on  a  bill  of  articles  charged  on  account  after  the  expiration 
of  six  months  from  the  time  of  their  delivery,  by  proof  "that 
the  usual  term  of  credit  on  the  purchase"  of  such  articles 
at  the  place  of  the  sale  "was  six  months  with  interest  after." 
It  was  decided  that  the  plaintiff  was  entitled  to  such  interest 
only  by  proof  of  an  agreement  to  pay  it,  or  by  proof  of  a 
demand  of  payment.  In  this  case,  in  his  opinion,  Justice 
Shepley  said,  that 

"One  is  entitled  to  have  his  rights  determined  by  his  own  contract 
or  by  the  law ;  and  he  cannot  without  proof  be  considered  as  agreeing 
to  any  usual  term  of  credit."^ 

Evidence  is  not  admissible  to  show  a  custom  of  mer- 
chants in  the  city  of  another  state  allowingthem  to  charge 

'  1  Bush  (Ky.)  225  (18G6)  ;  2  Dall.  (Pa.)  193  (1792). 

2  3  Hous.  (Del.)  32  (1864)  ;  8  Iowa  163  (1859) ;  Quincy  (Mass.)  108 
(1764) ;  contra,  9  Shepl.  (Me.)  116  (1842)  ;  5  Heath  (Me.)  457  (1855). 

3  Quincy  (Mass.)  108  (1764). 

*  9  Shepl.  (Me.)  116  (1842). 

*  9  Shepl.  (Me.)  116  (1842)  ;  5  Heath  (Me.)  457  (1855). 


32  THE   LAW    OF   INTEREST. 

interest  on  their  accounts,  when  the  courts  of  that  state 
have  refused  to  rccoc^nize  the  custom.^ 

3.  Tlie  debtor  must  knoio  the  amount  and  time  when 
it  is  due.  The  sum  due  must  be  known  to  the  debtor,'^  and 
he  is  chargeable  with  interest  thereon  from  the  time  it  came 
to  his  knowledge  ;^  but  the  allowance  of  interest  is  not  er- 
roneous, though  there  is  no  evidence  of  notice  to  the  defen- 
dant that  the  condition  of  his  contract  had  been  performed.* 
The  debtor  is  obliged  to  pay  interest  even  if  he  had  no 
notice,  provided  he  is  to  blame  for  not  receiving  notice.^ 

So  interest  is  chargeable  on  a  balance  of  accounts  only 
from  the  time  that  the  party  against  whom  the  charge  is 
made  has  notice  of  the  deficiency  on  his  part," 

Allowed  in  selllemeni.  A  demand  is  justly  and  equit- 
ably entitled  to  interest,  though  it  cannot  be  recovered  at 
law;  and  a  settlement  allowing  interest  is  valid,  even  as 
against  creditors  of  the  debtor.^ 

JRate.  In  England,  it  "would  seem  that  the  court  can 
vary  the  rate  per  cent  as  they  deem  it  to  be  consistent 
with  justice.®  In  the  United  States  the  legal  rate  is  always 
allowed,^  unless  parties  agree  what  the  rate  shall  be  after 
maturity  of  the  claim,  which  they  can  do  if  they  please.^*' 


'  2Blf.  (Ind.)312  (1830), 

^  57  Cal,  356,  641  (1881)  ;  63  Cal.  503  (1883), 

3  2  Ves,  Ch.  (Eng.)  365  (1751)  ;  2  Burr.  (Eng.)  1085  (1760)  ;  2  W.  Bl. 
(Eng.)  761  (1761)  ;  3  Wils.  (Eng.)  205  (1771)  ;  13111.  592  (1852)  ;  22  Pick. 
(IMass.)  291  (1839) ;  3  Caines  (N.  Y.)  226  (1805)  ;  1  Ilayw.  (X.  C.)  4 
(1791),  173  (1795)  ;  1  Ames  (4  R.  I.^  285  (1856)  ;  2  Ames  (5  K.  I.)  63 
(1857);  16  R.I.  213  (1888). 

*  34  Mich.  328  (1876). 

'  20  N.  Y.  403  (1859). 

«  12  Johns.  (N.  Y.)  156  (1815) ;  3  Cow.  (N.  Y.)  393  (1824), 

'  10  N.  Y.  (6  Seld.)  202  (1854), 

8  43  L.  J.  Ch.  (Eng.)  855  (1874)  ;  7  L.  R.,  II.  L.  Cas.  (Eug.)  27  (1874). 

9  13  Ark.  563  (1853). 
'°2  Col.  70  (1873), 


INTEREST    ALLOWED   AS   DAMAGES.  33 

Not  alloived  if  included  in  principal.  AVhere,  upon 
the  evidence,  it  is  clear  that  the  consideration  of  a  contract 
was  excessive  because  of  an  agreement  to  make  it  so  on 
account  of  slow  and  precarious  payment,  interest  ought 
not  to  be  allowed,  as  the  damages  for  delay  are  included 
in  the  amount  due.^ 

Demand  for  principal  includes  interest.  "When  interest 
is  a  legal  consequence  of  a  debt,  even  without  such  a  stip- 
ulation in  the  contract,  a  demand  for  the  principal  is  a  de- 
mand for  both  principal  and  interest,  that  is,  the  interest 
is  included  in  the  demand.^ 

I.    RELATING  TO  PERSONS. 

The  law  of  interest  allowed  as  damages  generally  applies 
alike  to  all  individuals,  and  to  those  corporations  that  are 
regarded  as  persons.  But  there  are  exceptions  arising  out 
of  a  person's  office  or  position,  and  the  law  declares  that  per- 
sons having  such  relations  shall  be  regarded  diflerently 
from  the  common  individual.  These  exceptional  persons 
are  those  holding  property  in  their  hands,  and  acting  as 
trustees,  or  in  a  public  office.  The  rules  of  law  in  regard 
to  them  vary  to  some  extent,  but  there  are  certain  princi- 
ples which  run  through  them  all.  The  first  class  of  such 
persons,  alphabetically,  is  that  of 

(rt)  Administrators.  Good  faith  and  diligence  on  the 
part  of  administrators  of  the  estates  of  deceased  persons 
are  indispensable.  They  must  so  conduct  themselves  as 
uot  to  subject  the  estate  to  unnecessary  expense,  charge, 
or  loss  ;^  and  when  an  administrator  manifestly  intends  to 

1  4  Bro.  P.  C.  (Eng.)  539  (1723). 

2  8  Mart.,  N.  S.  (La.)  G08  (1830), 

3  60  Ga.  316  (1878) ;  10  Vt.  192  (1838). 

3 


34  THE    LAW    OF    INTEREST. 

do  his  duty  fairly  ho  will  not  ])e  held  liable  lor  interest  on 
slight  grounds.^ 

Collection  of  asseis.  Upon  receiving  their  appointment, 
they  must  proceed  to  collect  the  debts  due  to  the  estate. 
Even  if  the  money  be  well  invested  and  drawing  interest, 
they  will  not,  for  that  reason,  be  charged  with  interest, 
which  may  have  been  thus  lost.^  Neither,  says  the  court 
in  California,  will  they  be  liable  to  pay  interest  lost,  if 
they  take  from  a  bank  money  that  is  drawing  interest, 
when  they  had  money  with  which  to  pay  dcbts.^  So, 
where  a  sale  is  made  on  credit,  bearing  interest,  under 
an  order  of  court,  it  is  not  improper  for  the  administrator 
to  receive  the  money  after  the  sale  was  made,  and  before 
the  money  became  due,  thus  stopping  the  interest.* 

Payment  of  debts.  Administrators  must  pay  del)ts, 
especially  those  bearing  interest,  as  soon  as  possible.  If 
the  sums  received  by  them  are  large,  and  they  cannot  be 
immediately  applied  to  extinguishing  claims  against  the 
estate,  they  should  be  deposited  where  they  can  be  readily 
available  and  productive,  if  that  can  be  done  with  safety, 
or  without  subjecting  the  administrators  to  hazard.  But 
if  the  sums  received  are  small  and  the  debts  against  the 
estate  are  large,  it  may  not  be  feasible  to  apply  the  sums 
in  payment  of  the  debts,  and  if  they  are  not  so  applied  the 
administrators  are  not  chargeable  with  interest  thereon.^ 
If  the  court  orders  an  administrator  to  pay  a  certain  claim, 
it  bears  interest  from  and  after  that  time,  whether  it  did 
before  or  not.*^ 

'  4  Gill  &  J.  (Mel.)  453  (1832)  ;  2  Dcv.  &  Bat.  Eq.  (N.  C.)  400  (1839)  ; 
101  N.  C.  4G1  (1888). 
2  41  N.  II.  355  (1860). 
344  Cal.  584  (1872). 
MGill&J.  (Md.)  453  (1832). 
"  78  Ala.  73  (1884)  ;  10  Vt.  192  (1838). 
«  70  Cal.  184  (1886) ;  74  Cal.  567  (1888). 


INTEREST   ALLOWED    AS    DAMAGES.  35 

111  case  ail  adiiiinistfator  pays  a  del)t  of  the  estate  in 
full,  believing  that  the  estate  is  solvent,  after  a  decree  of 
insolvency,  he  can  recover  interest  on  the  amount  over- 
paid only  from  and  after  demand.^ 

As  soon  as  an  administrator  is  in  funds  to  a  sufficient 
amount  debts  due  to  him  must  be  considered  as  paid,  they 
being  allowed  to  carry  interest  no  longer.^ 

Administrators  are  liable  for  interest  on  all  illegal  dis- 
bursements,^  even  if  they  are  made  to  themselves.* 

Investment  of  assets.  Administrators  must  not  keep 
the  money  that  they  have  in  their  hands  and  which  they 
have  collected  unemployed  for  an  unreasonable  length  of 
tinie.^  They  must  pay  debts  with  it,  or  put  it  at  interest.^ 
The  rule  is  that  they  are  not  chargeable  with  interest  on 
the  fund  in  their  hands  unless  they  have  retained  it  more 
than  a  year  from  their  appointment,  from  which  time  in- 
terest bemns  to  run.^ 

Administrators  are  dealt  with  much  more  leniently  than 
executors  and  trustees,  as  the  former  handle  the  funds 
simply  for  the  winding  up  of  the  estate,  while  executors 

1  3  Pick.  (Mass.)  2G1  (1825). 

2  2  Hill  (S.  C.)  340  (183-i). 

3  G  Geo.  (35  Miss.)  321  (1858)  ;  2  Hill  (S.  C.)  468  (1834). 
*  5  Cusli.  (Miss.)  7G7  (1854). 

°  22  Ala.  478  (1853)  ;  50  Arlv.  217  (1887)  (in  this  case  the  adminis- 
trator retained  the  assets  between  one  and  two  years) ;  32  Cal.  424 
(1809)  ;  42  Cal.  288  (1871)  ;  11  Gill  &  J.  (Md.)  185  (1840)  ;  10  Md.  352 
(1856)  ;  25  Mich.  428  (1872)  ;  41  N.  H.  355  (1860)  ;  1  Ashm.  (Pa.)  305 
(1822)  ;  4  Desau.  (S.  C.)  65  (1809),  463  (1814),  555  (1815)  ;  61  Vt.  254 
(1888).  In  the  last  cited  case  the  length  of  time  was  several  years. 
Contra,  Lit.  Sel.  Cas.  475  (1821). 

6  31  Ala.  227  (1858)  ;  66  Ala.  35  (1880)  ;  76  Ala.  509  (1884)  ;  4  Heath 
(Me.)  15  (1854)  ;  44  Miss.  170  (1870)  ;  41  N.  H.  355  (I860)  ;  1  Johns. 
Ch.  (N.  Y.)620  (1815). 

'  30  Ga.  463  (1860)  ;  4  Gill  &  J.  (Md.)  453  (1832)  (in  which  thirteen 
months  Avere  aUowed)  ;  40  Miss.  256  (1866)  ;  6  S.  C.  83  (1874)  ;  11  S.  C. 
139  (1878). 


36  THE    LAW   OF   INTEREST. 

and  trustees,  as  a  general  rule,  hold  the  property  for  the 
purpose  of  obtaining  an  income,  something  more  than  the 
mere  closing  up  of  the  affairs  of  the  deceased. 

If  an  administrator  has  wantonly  kept  funds  idle,  he  is 
chargeable  with  yitercst  ;^  but  a  mere  neglect  to  invest 
money  which  he  may  be  called  upon  to  pay  over  to  the 
distributee  at  any  moment,  is  no  ground  for  charging  him 
with  interest,  if  the  money  is  kept  ready  to  l^e  paid  over 
when  called  for.^ 

"Where  an  administrator  is  ordered  by  the  court  to  let 
out  the  monpy,  but  refrains  from  doing  so  because  he 
deems  it  unsafe  on  account  of  the  unsettled  condition 
of  the  country,  he  is  chargeable  with  interest  on  the 
money  after  six  months  from  the  time  he  received  it/  If 
he  retains  money  under  the  sanction  of  the  court  and  par- 
ties interested  to  meet  some  future  contingences  he  will 
not  be  liable  for  interest.*  So,  when  he  cannot  find  the 
heirs,  and  the  court  refuses  him  the  right  to  invest  it.'' 

Administrators  should  not  be  charged  with  interest  if 
the  amoiuit  of  money  on  hand  is  reasonable.'^ 

If  they  act  reasonably  in  making  a  loan,  but  fail  in  col- 
lecting the  interest,  they  are  not  responsible  for  it,  unless 
they  could  have  collected  it.^ 

They  must  not  speculate  with  the  funds  ;^  and  if,  through 
their  negligence,  a  note  is  lost,  they  are  liable  for  interest 
at  the  rate  named  in  the  note.^ 

'  2  Dev.  &  Bat.  Eq.  (N.  C.)  400  (1839) 

2  11  Paige  (N.  Y.)  142  (1844). 

^CG  Ala.  35  (1880). 

*  3  Gill  &  J.  (Md.)  20  (1830). 

6  20  Md.  495  (1800). 

«  98  Mo.  202  (1889).  In  the  case  cited  01  Vt.  254  (1888),  the  amount 
retained  for  several  years  was  seven  hundred  dollars.  It  was  decided 
to  be  unreasonable. 

'72Cal.  335  (1887). 

MO  Miss.  250  (1800). 

9  G  Geo.  (Miss.)  321  (1858) ;  44  Miss.  170  (1870). 


INTEREST   ALLOWED   AS   DAMAGES.  37 

Pending  proper  litigation,  administrators  are  not  liable 
to  pay  interest  on  the  fund  when  they  have  made  none.^ 
But,  if  they  set  up  a  claim  to  the  funds  in  their  hands,  they 
are  liable  for  interest  pending  litigation,  if  the  case  is 
decided  against  them.^ 

They  are  not  liable  for  interest  on  funds  due  to  distrib- 
utees residing  in  a  country  which  is  at  war  with  the  coun- 
try of  the  administrators.^ 

Profits.  Administrators  must  account  for  all  interest 
that  they  receive,  be  the  rate  what  it  may,^  even  though 
they  realize  it  from  a  misappropriation  of  the  funds  of  the 
estate.*'  So,  if  they  speculate  with  the  funds,  and  are 
successful.^ 

Mingling  funds.  If  administrators  mingle  the  funds 
of  the  estate  with  their  own  mone}^  they  are  liable  for  in- 
terest,^ besides  forfeiting  all  pay  for  services  in  caring  for 
it.'' 

Misapijlication  of  funds.  If  administrators  misapply 
the  funds,  they  will  be  liable  for  interest  thereon.^'' 

Private  use  of  funds.  Administrators  must  not  use 
the  money  of  the  estate  in  their  own  business  ;^^  if  they  do, 
the  heirs  or  creditors  can  elect  to  take  the  profits  they  have 
made  or  legal  interest. ^^ 

Compound  interest.     If  administrators  are  very  culpa- 


1  44  Ga.  G52  (1872). 

2  Rich.  Eq.  Cas.  (S.  C.)  452  (1831). 

3  78  Va.  12  (1883),  605  (1884). 

*  30  Ga.  463  (18G0)  ;  4  Blf.  (Ind.)  115  (1835)  ;  Dud.  (S.  C)  48  (1837). 

5  2  Geo.  (Miss.)  578  (1856). 

6  73  Mo.  569  (1881). 

">  6  Geo.  (Miss.)  321  (1858) ;  44  Miss.  170  (1870). 

8  10  Ala.  900  (1846)  ;  73  Cal.  545  (1887). 

9  42  Miss.  221  (1868)  ;  56  Vt.  264  (1883). 
i»93N.  C.  488  (1885). 

"  31  Ala.  227  (1858) ;  10  Md.  352  (1856) ;  6  Geo.  (Miss.)  321  (1858)  ; 
44  Miss.  170  (1870)  ;  41  N.  H.  355  (1860)  ;  101  N.  C.  461  (1888). 
»2  39  Cal.  597  (1870). 


38  THE    LAW    OF    INTEREST. 

l)le,^  or  use  the  fantls  of  the  estate  in  their  private  l)ii3iness, 
jind  refuse  to  give  an  account  they  must  pa}'  compound  in- 
terest ;-  but  if  tliey  simply  mingle  the  money  with  their 
own  they  are  only  chargeable  with  simple  interest.^ 

Accounts.  The  probate  court  should  exercise  equitable 
control  over  interest  in  administrators' accounts.*  An  ac- 
count stated  by  one  administrator  is  binding  upon  all,  and 
the  balance  will  bear  interest  from  the  time  it  is  signed.^ 
If  the  court  has  once  settled  the  question  of  interest  on  the 
items  of  an  account  it  Avill  not  be  reopened;  otherwise,  it 
will  be.''  An  administrator  is  only  liable  for  interest  on 
the  balance  of  principal  in  his  hands  up  to  the  date  of  the 
decree  at  the  close  of  the  administration  account ;'  but  after 
the  settlement  of  the  account  the  balance  which  may  include 
interest  carries  interest  on  the  whole  from  the  time  of  set- 
tlement.^ If  interest  is  charged  on  the  debits  in  an  account, 
the  credits  should  be  allowed  interest.^  Bests.  An  admin- 
istrator's accounts  should  be  reckoned  with  annuul  rests  ;^" 
and  if  he  retains  the  balance  unnecessarily  interest  should 
be  allowed  thereon."  In  Georgia,  it  has  been  held  that  if 
the  administrator  has  been  grossly  negligent  in  not  making 
returns  of  the  condition  of  the  estate  in  his  hands,  interest 
bhould  be  compounded  against  him  every  six  years  on  bal- 
ances in  bis  hands. '^ 

Interest  on  distributive  shares.     After  an  administrator 

1  U  111.  1  (1852)  ;  87  Tenn.  172  (1889). 

2  1  Johns.  Ch.  (N.  Y.)  620  (1815). 

3  10  Ala.  900  (1846)  ;  73  Cal.  545  (1887). 
"  98  Mo.  262  (1889). 

"   1  Huyw.  (N.  C.)  104  (1794). 
«  6  Pick.  (Mass.)  422  (1828). 
'  31  S.  C.  463  (1889)  ;  4  Grat.  (Va.)  293  (1848) 
8  70  Pa.  St.  183  (1871). 
»  87  Tenn.  172  (1889). 

'°  17  Fla.  820  (1880)  ;  19  Fla.  300,  373  (1882). 
"  52  Towa  665  (1879)  ;  8  S.  &  M.  (Miss.)  682  (1847). 
'2  G  Ga.  265  (1849)  ;  8  Ga.  417  (1850). 


INTEREST    ALLOWED    AS    DAMAGES.  39 

has  completed  the  settlement  of  the  estate,  it  is  his  duty 
to  turn  over  to  the  heirs  or  the  court  the  balance  of  the  per- 
sonal estate,  after  paying  debts  and  charges  of  administra- 
tion, within  a  reasonable  time  ;^  and  if  he  does  not  do  so 
the  court  in  Connecticut  holds  that  he  will  be  char2:eable 
with  interest  from  the  time  of  the  settlement,^  or  order  of 
distribution, 3  although  he  has  kept  the  funds  on  deposit, 
unemployed.*  The  general  rule  is  that  he  will  not  be 
charged  with  interest  if  he  has  not  received  it,  until  a  de- 
mand is  made,  and  payment  refused  ;^  but  when  a  definite 
sum  is  ordered  to  be  paid  to  a  distributee  on  settlement  of 
the  estate,  no  demand  is  necessary  to  make  it  bear  interest.*' 
If  an  heir  is  absent,  a  reasonable  time  will  be  given  in  which 
to  find  him  ;  and  in  one  case^  six  months  from  the  confirma- 
tion of  the  administrator's  account  was  allowed. 

Interest  on  advances.  The  general  rule  is  that  admin- 
istrators cannot  recover  interest  on  money  of  their  own 
that  they  have  paid  out  for  the  benefit  of  the  estate,  because 
it  is  in  their  power  to  put  themselves  in  possession  of  cash 
from  the  funds,  and  the  law  does  not  expect  them  to  ad- 
vance money  out  of  their  own  pocket  for  the  benefit  of  the 

'  31  Pa.  St.  44  (1857). 

*  15  Conn.  115  (1842).  In  this  case,  there  had  been  uo  demand  made 
by  the  heirs,  they  being  at  the  time  of  the  settlement,  and  long  after- 
ward, minors,  having  no  guardian. 

3  67  Cal.  279  (1885). 

*  75  Ala.  1G2  (1883)  ;  76  Ala.  535  (1884)  ;  78  Ala.  73  (1884).  In  1853, 
the  Alabama  court  decided  that  an  administrator  was  not  properly 
chargeable  with  interest  on  money  in  his  hands  if  he  showed  that  he 
had  not  used  it ;  but  peculiar  circumstances  caused  a  difi'erent  applica- 
tion of  the  rule,  probably.    22  Ala.  478  (1853). 

"  2  Lit.  (Ky.)  346  (1822)  ;5  Mon.  (Ky.)  578  (1827)  ;  2  J.  J.  Mar.  (Ky.) 
201  (1829) ;  11  Paige  (N.  Y.)  441  (1845).  A  distributee,  residing  with 
the  administrator,  having  been  unreasonably  tardy  iu  the  assertion  of 
her  right  in  the  estate,  interest  was  not  allowed  during  the  time  she 
iresided  with  the  administrator.     5  Eich.  Eq.  (S.  C.)  31  (1852). 

8  87  N.  C.  196(1882). 

'  24  Pa.  St.  498  (1855). 


40  THE    LAAV    OF    INTEREST. 

estate.^  If  interest  were  allowed  in  such  cases  freely,  ad- 
ministrators would  be  tempted  to  use  a  great  deal  of  their 
private  funds  in  this  way.  But  in  cases  of  emergency, 
when  the  estate  is  materially  benefited  l)y  it,  they  can  re- 
cover interest  on  such  advances,^  providing  tiiey  act  reason- 
ablv  in  converting  the  estate  into  money. ^  So,  adminis- 
trators have  no  right  to  1>orrow  money  of  other  persons 
lor  the  use  of  the  estate  ;  and  if  they  do  they  will  not  gen- 
erally be  allowed  interest  paid  on  it  in  their  accounts.* 

Estates  of  deceased  administrators.  An  administrator 
of  a  deceased  administrator  is  not  bound  to  make  interest 
on  the  funds  of  the  original  estate  in  the  hands  of  the  first 
administrator  at  the  time  of  his  death  ;  or  for  the  time  that 
the  second  estate  is  unrepresented.^  But  if  the  second 
administrator  uses  the  funds  of  the  first  estate,  or  is  guilty 
of  wilful  neglect,  he  nmst  pay  comi)Ound  interest.^  This 
rule  also  applies  to  administrators  de  bonis  nonJ 

(b)  Agents,  attorneys  and  factors.  Agents  are  not 
responsible  to  their  principals  if  they  follow  their  instruc- 
tions f  neither  are  they  generally  liable  to  pay  interest  on 
funds  in  their  hands  if  the}'  have  conducted  themselves  in 
a  reasonable  manner  and  with  due  diligence  f  and  the  same 
rule  applies  to  attorneys. ^° 

1  9  Mass.  37  (1812). 

2  31  Ala.  227  (1858)  ;  GO  Ala.  557  (1877)  ;  UN.  J.  L.  (G  Ilalst.)  44 
(1829). 

3  8Vt.  365  (1836). 

*  5  Nev.  189  (1869). 

=>  2  Hill  (S.  C.)  560,  and  notes  (1835). 

c  10  Ala.  900  (184G). 

7  G  S.  C.  83  (1874). 

^  5  Johns.  Ch.  (N.  Y.)  534  (1821). 

9  1  Met.  (Mass.)  112  (1810) ;  G  Johns.  Ch.  (N.  Y.)  353  (1822) ;  4  Dall. 
(Pa.)  286  (1803)  ;  contra,  44  Ala.  627  (1870),  unless  some  contract  or 
usage  releases  them  from  paying  interest. 

•«  12  Ga.  564  (1853)  ;  26  Vt.  544  (1854).  2  Leigh  (Va.)  650  (1831) 
decides  that  attorneys  arc  not  bound  to  pay  interest  ou  debts  lost 
tlirough  their  negligence. 


INTEREST    ALLOWED    AS    DAMAGES.  41 

Courts  early  held  that  after  a  reasonable  time  an  agent 
was  liable  to  pay  interest  on  the  money  received  for  his 
principal.^  So,  with  an  attorney  in  later  times  in  Georgia 
and  Illinois.-  The  Massachusetts  court  decided  many  years 
ago  that,  if  agents  unnecessarily  neglect  to  inform  their 
principals  of  the  receipt  of  money,  they  are  liable  for  in- 
terest from  the  time  when  they  should  have  communicated 
such  information.^  The  general  rule,  however,  seems 
to  be  that  a  demand  is  necessary  to  make  an  agent  liable 
for  interest  on  money  received  for  his  principal,  in  the 
transaction  of  the  business  of  the  principal,*  unless  the 
agent  has  received  special  instructions  to  remit  the  money 
as  fast  as  it  is  collected,^  or  is  in  default  in  neglecting  to 
render  his  account.^  The  same  rule  applies  to  attorneys.^ 
An  agent  is  also  bound  to  make  a  reasonable,  speedy  and 
prudent  investment  of  funds  sent  to  him  by  his  principal 
for  that  purpose,  and  if  he  does  not  do  so  he  will  be  charge- 
able with  interest.^  So,  if  an  agent  fraudulently  converts 
to  his  own  use  money  he  has  collected  he  must  pay  inter- 
est from  the  time  of  such  wrongful  conversion  f  or,  if  he 
has  converted  that  which  has  been  given  to  him  to  invest 
forthwith,  he  is  liable  for  interest  from  its  receipt,  without 


'  Quincy  (Mass.)  5  (17G2) ;  3  Desau.  (S.  C.)  497  (1812) ;  4  Desau. 
(S.  C.)  110  (1810)  ;  5  Call  (Va.)  118  (1804). 

2  34  Ga.  173  (18G5)  ;  77  111.  337  (1875). 

^  9  Pick..  (Mass.)  368  (1830). 

*  31  lud.  156  (18C9) ;  31  Iowa  49  (1870)  ;  1  Met.  (Mass.)  112  (1840)  ; 
4  Jones  Law  (N.  C.)  155  (1856)  ;  98  N.  C.  550  (1887) ;  Bail.  Eq.  (S.  C.) 
226(1831).  The  court  iu  Louisiana  holds  that  interest  ruus  from  a 
judicial  demand  only,  unless  the  agent  employed  the  funds  in  his  own 
business,  or  there  has  been  a  real  prior  default.    15  La.  Ann.  17  (ISGOj. 

5  2Kelley  (Ga.)  370  (1847). 

«  8  Ves.  (Eug.)  48  (1802) ;  C6  Ala.  424  (1880)  ;  26  Vt.  544  (1854). 

'  26  Vt.  544  (1854). 

8  40  Conn.  464  (1873)  ;  1  Dev.  Eq.  (N.  C.)  520  (1830). 

9  77  111.  337  (1875)  ;  31  Ind.  156  (1869). 


42  THE    LAW    OF    INTEREST. 

tidcinaiid,^  Agents  are  also  chargeable  with  legal  interest 
if  the  V  use  the  funds  in  their  own  business.^  This  rule  also 
applies  to  attorneys.^ 

Mixing  funds.  Mixing  the  principal's  money  with  the 
ao-ent's  private  funds  does  not  make  him  liable  to  pay 
interest,  unless  he  uses  it.* 

Liahilihj  for  suh-altorney.  An  attorney  is  bound  to 
pay  interest  on  a  sum  collected,  if  he  sends  the  claim  for 
collection  to  another  attorney,  without  orders,  and  the 
second  attorney  embezzles  it.^ 

tSpecicd  damages.  If,  on  account  of  an  undue  deten- 
tion of  his  money  by  an  agent,  a  principal  is  obliged  to 
borrow  money  at  a  greater  than  the  legal  rate  of  interest, 
the  agent  is  not  liable  to  pay  more  than  the  legal  rate,  un- 
less the  bill  seeks  to  recover  the  profits  he  has  made,  if 
any,  and  he  has  made  more  than  the  legal  rate.  In  case 
the  profits  exceed  the  legal  rate,  the  full  amount  of  the 
profits  can  be  collected. '^ 

Prqfils.  All  the  interest  which  an  agent  receives  on  the 
money  of  his  principal  must  be  accounted  for, — it  belongs 
to  the  principal,  and  not  to  him.  He  must  make  no 
profit  beyond  compensation  for  his  services.^ 

The  law  presumes  that  an  agent  has  collected  the  inter- 
est on  interest-bearing  securities  in  his  possession,  and 
he  nuist  prove  that  he  has  not  received  it,  else  he  will  be 
charfjed  with  it.^ 

'  9  Gray  (Mass.)  GG  (1857). 

2  104  IiKl.  5G2  (1885)  ;  G  Johns.  Ch.  (N.  Y.)  353  (1822). 

3  2G  Iowa  482  (1868)  ;  G  Johns.  Ch.  (N.  Y.)  353  (1822). 

*  3a  L.  J.,  N.  S.,  Eq.  (Eng.)  3G9  (1870)  ;  GO  Vt.  410  (1888). 

*  24  Kas.  GOO  (1880). 

^  i:57  Mass.  437  (1884).  In  this  case  tlie  agent  was  the  treasurer  of 
a  corporation. 

'  24  Conn.  2G7  (1855)  ;  1  Dev.  Eq.  (N.  C.)  520  (1830)  ;  contra,  8  Ves. 
(Eng.)  48  (1802). 

«  CO  Vt.  4J0  (1888). 


INTEREST  ALLOWED    AS    DAMAGES.  43 

Practice.  When  a  discharged  agent  has  retained  money 
of  his  principal,  and  notified  him  of  it,  the  question  of  re- 
covery of  interest,  says  the  Illinois  court,  is  for  the  jury 
under  proper  instructions,  and  it  is  error  for  the  court  to 
compute  interest  and  direct  the  jury  to  allow  it.^ 

Accounting.  If  an  agent  has  stipulated  to  account  to 
his  principal  semi-annually,  he  is  liable  to  pay  interest  on 
all  sinus  of  money  received  and  not  accounted  for  at  the 
stipulated  times. ^  Annual  rests  are  also  allowable,  but  not 
after  the  relation  of  principal  and  agent  has  ceased.^  Com- 
pound interest  is  allowed  only  when  agents  use  the  money 
in  their  business.* 

The  balance  of  a  factor's  account,  struck  after  termina- 
tion of  dealings  with  his  principal,  does  not  bear  interest 
until  demand ,  in  the  courts  of  South  Carolina.^  The  courts 
of  Louisiana,  however,  hold  that  a  balance  struck  and  ac- 
count rendered  by  a  factor  to  his  principal,  and  acquiesced 
in  by  him,  draws  interest  from  that  time,  though  it  may 
contain  interest,*^  but  otherwise  if  it  is  not  acquiesced  in.^ 

An  attorney  is  not  chargeable  with  interest  on  so  much 
of  the  money  in  his  hands  as  he  is  entitled  to  receive  for 
his  services  and  disbursements.^ 

Interest  should  be  charged  only  on  the  balance.^  If,  how- 
ever, the  agent  is  charged  interest  on  the  receipts,  he  must 
be  credited  with  interest  on  his  commissions^'^  and  disburse- 

'  com.  149  (1871). 
=^Ducl.  Eq.  (S.  C.)8o  (1837). 

='  9  Jur.,  N.  S.   (Eng.)  267  (18G3)  ;  32  L.  J..  Ch.  (Eng.)   540  (1863)  ; 
11  W.  R.  (Eng.)  411;  32  Beav.  (Eng.)  86  (1863). 
"  39  L.  J.,  N.  S.,  Eq.  (Eng.)  369  (1870). 
'  Harp.  (S.  C.)  274  (1824) ;  1  Hill  (S.  C.)  400  (1833). 
«4La.  Ann.  160  (1849)  ;  29  La.  Ann.  679  (1877). 
Ul  La.  Ann.  217  (1857). 
8  9  Conn.  15  (1831). 
9 3 Hun  (N.  Y.)  283  (1874). 
'"95  N.  C.  358  (1886)  ;  47  Pa.  St.  485  (1864). 


44  THE    LAW    OF    INTEREST. 

ments.^  Interest  is  allowed  on  attorneys'  claims  for  ser- 
vices and  costs  when  they  are  liquidated.-  But  the  costs 
are  not  liquidated  l)y  being  taxed  and  included  in  the 
judgment.^ 

Interest  is  also  allowable  as  damages  for  the  non-pay- 
ment of  commissions  when  earned  ;^  which  in  case  of  a  real 
estate  agent  is  the  time  the  contract  is  made  between  the 
vendor  and  vendee.* 

Advances.  An  agent  can  collect  interest  on  advances 
f.nd  disbursements  made  for  the  principal,*'  and  on  money 
advanced  to  the  principal  at  his  request/  from  the  time 
the  money  was  advanced.^  So,  on  advances  made  by  at- 
torneys.^ If  a  certain  rate  of  interest  is  stipulated  to  be 
paid  for  advancements  that  rate  must  govern  until  the  ad- 
vance is  paid,'"  Interest  and  commissions  cannot  1)oth  be 
charged  for  money  advanced.'^ 

Liens.  An  agent,  entitled  to  retain  property  for  his  in- 
demnity, although  he  disposes  of  it  without  authority,  is 
not  chargeable  with  interest  on  the  avails  of  that  property, 
duriiiir  the  continuance  of  his  lien,'-  because  he  could  not  be 
compelled  to  pay  it  to  the  principal  while  the  lien  existed. 

(c)  Assignees  of  bankrupts  and  insolvents.  Such  assign- 
ees are  allowed  a  reasonable  time  in  which  to  settle  the  es- 


»3G  X.  Y.  255  (1867). 

«  3  Ilun  (N.  Y.)  218  (1874)  ;  6  Hun  (X.  Y.)  475  (1S7G). 
3  23  How.  Pr.  (X.  Y.)  45  (18G1). 
■•38  -Mich.  172  (1878). 
*8  Vr.  (X.  J.)  437  (1874). 

«3  Campb.  (Eng.)  467  (1813) ;  1  Dana  (Ky.)  309  (1833)  ;  8  Rich.  (S. 
C.)  287  (1855). 

7  2  Beav.  (ling.)  359  (1840)  ;  1  Bail.  (S.  C.)  G20  (1830). 

"19  Tex.  24G  (1857). 

9  19  Ark.  487  (1858). 

'"20  Tex.  772  (1858). 

<•  1  Hill  (S.  C.)  400  (1833)  ;  Riley  (S.  C.)  215  (1837). 

'••'3  Conu.  171  (1819). 


INTEREST   ALLOWED   AS    DAMAGES.  45 

tcate,^  After  that  time  they  are  liable  to  pay  interest  on 
the  money  in  their  hands,  if  they  have  made,  or,  under 
certain  circumstances,  might  have  made  it  productive.^ 
They  are  not  bound  to  invest  the  funds  under  ordinary 
circumstances,^  as  their  business  is  to  settle  the  estate  im- 
mediately. 

The  assignee's  own  note,  when  included  In  the  assign- 
ment, should  be  reckoned  as  cash  received  at  the  time  it 
falls  due.* 

Assignees  are  liable  to  pay  interest  if  they  mix  the 
funds  with  their  own,  by  depositing  them  in  a  bank  in 
their  own  names,  or  otherwise.^  This  is  true  notwith- 
standing they  are  always  ready  to  pay  creditors.*'  This  rule 
also  refers  to  an  assignment  for  the  benefit  of  creditors." 

If  an  assignee  mixes  the  funds  with  his  own,  neglects 
to  settle  his  accounts,  and  when  called  into  equity,  fails  to 
account  satisfactorily,  or  show  what  he  did  with  the  funds, 
he  is  chargeable  with  interest  with  annual  rests. ^ 

After  the  collection  of  assets  and  proof  of  debts,  they 
are  chargeable  with  interest  from  the  time  when,  by  the 
exercise  of  diligence,  they  could  have  secured  an  order 
declaring  a  dividend.^ 

Advances.  Assignees  may  be  allowed  interest  on  pay- 
ments necessarily  made  before  any  funds  come  to  their 
hands.i» 

'The  court  in  Alabama  allowed  tAvelve  months  in  25  Ala.  3G3  (1854). 
'■^25  Ala.  363  (1854);  2W.  &  S.  (Pa.)  557   (1841)  ;  3  S.  C.  11  (1871). 
3  68  Pa.  St.  454  (1871) ;  couira,  24  Pa.  St.   487   (1855),  which  says 
that  assignees  must  invest  funds  which  they  cannot  apply. 
^25  Ala.  363  (1854). 

532  Barb.  (N.  Y.)  587  (1860)  ;  68  Pa.  St.  454  (1871). 
632  Barb.  (N.  Y.)  587  (1860). 
732  Barb.  (N.  Y.)  587  (1860). 

8  124  111.  391   (1888). 

9  120  111.  1  (1889). 

i«  Sax.  (N.  J.)  571  (1832). 


46  THE    LAW    OF   INTEREST. 

{d)  Banks.  Niitiomxl  banks  in  the  United  States  are 
controlled  by  the  United  States  laws.^  Other  banks  are 
governed  by  the  hiws  of  the  states  by  which  they  are  incor- 
porated.'- Statntes  vary  their  liability  to  some  extent, 
but  otherwise  the  rules  of  law  regarding  interest  on  their 
eno'ao'enients  are  the  same  as  those  ijovcrnins:  individuals.^ 

A  chuise  in  the  charter  of  a  bank  limiting  interest  on 
discounts,  does  not  apply  after  the  breach  of  a  contract.* 

A  banker  is  not  liable  at  common  law  to  pay  interest  up- 
on money  deposited,^  although  at  the  time  of  the  deposit 
it  was  declared  by  the  parties  that  interest  should  not  ])e 
payable  upon  a  certain  event  which  did  not  happen.''  But 
where  deposits  bear  interest,  after  an  acquiescence  in  ac- 
counts annually  furnished  by  bankers,  an  agreement  that 
the  balance  of  principal  and  interest  shall  bear  interest  is 
presumed.^ 

(e)  Solvent  estates.  The  general  rule  is  that  where 
claims  bear  no  contractual  interest,  no  interest  should  be 
allowed  on  them  before  the  date  of  the  decease  of  the  debt- 
or, because  the  laches  was  the  voluntary  act  of  the  plaintlif 
until  the  decease  of  the  debtor  when  the  creditor  became 
necessarily  subject  to  the  delay  ordinarily  attending  the 
settlement  of  estates.  Hence,  interest  should  be  allowed 
on  all  claims  after  death,  if  the  estate  is  solvent.^  But  in- 
terest is  not  allowed  even  then  if  the  creditor  delays  the  ad- 
ministration.^    If  the  debt  is  unliquidated,  the  New  York 

'  4i  Ind.  2D8  (1873)  ;  52  Iowa  lU  (1879). 

MOTeiiu.  173(1872). 

3  24  Conn.  147  (1855) ;  C3  Tcnn.  499  (1872). 

*  9  Wend.  (N.  Y.)  471  (1833). 

*  5  W.  Va.  50  (1871).    See  G5  Hun  (N.  Y.)  342  (1892). 
eSB.  &  Ad.  (Eng.)  282  (1833);  2  N.  &  M.  (Eug.)  120(1833). 
7  1  Ball  &  B.  (Ire.)  428  (1810). 

'  4  Met.  (Mass.)  317  (1842)  ;  11  Vt.  214  (1839). 
9  41  Mich.  C57  (1879). 


INTEREST   ALLOWED   AS    DAMAGES.  47 

court  holds  that  it  carries  interest  from  jutlgment  onl}-.^ 
In  Texas,  the  approval  of  a  claim  hy  an  administrator  is 
deemed  to  be  a  sort  of  judgment,  and  the  debt  bears  in- 
terest from  that  time.^ 

When  the  deceased  had  in  his  hands  certain  money  for 
investment  which  belonged  to  his  wife,  and  which  he  had 
mingled  with  his  own,  the  estate  should  pay  compound 
interest  upon  it.^ 

In  England,  if  a  testator  devises  his  land  for  the  payment 
of  his  debts,  it  is  like  a  mortgage  given  to  secure  them,  and 
will  make  simple  contract  debts  carry  interest  as  the  land 
yields  annual  profits  ;*  otherwise,  however,  if  it  is  a  general 
charge  to  pay  debts,  so  far  as  it  concerns  simple  contracts.^ 

(/)  Executors.  Executors  are  regarded  as  temporary 
custodians  of  the  assets  of  the  estate,  holdinsf  them  for 
distribution  and  not  for  investment.^  They  will  not  be 
charged  with  interest  personally  if  they  have  acted  reason- 
ably, and  have  not  made  private  use  of  the  funds. ^  If 
they  use  the  money  in  their  private  business,  they  must 
pay  compound  interest  thereon,^  as  this  is  necessary  in 
order  to  reach  the  profits  which  they  ought  to  refund.  If 
they  simply  allow  the  funds  to  be  idle  an  unreasonable 
length  of  time,  they  will  be  charged  with  simple  interest.^ 

'  19  Hun  (N.  Y.)  595  (1880). 

2  9  Tex. 517  (1853). 

3  104  N.  Y.  G18  (1887). 

*  2  P.  Wm.  (Eng.)  26  (1722). 

*  Vern.  &  Scriv.  (Ire.)  528  (1788). 

6  40  Conn.  4G4  (1873). 

7  13  Mass.  232  (1816). 

8  10  Md.  352  (1856)  ;  1  Johns.  Ch.  (N.  Y.)  508,  527,  620  (1815)  ;  5 
Johns.  Ch.  (N.  Y.)  441  (1821)  ;  1  Dev.  Eq.  (N.  C.)  373  (1830)  ;  1  Binn. 
(Pa.)  194  (1806) ;  84  Pa.  St.  51  (1877). 

8  1  Johns.  Ch.  (N.  Y.)  508,  620  (1815)  ;  5  Johns.  Ch.  (N.  Y.)  441  (1821)  ; 
2  Dev.  &  Bat.  Eq.  (N.  C.)  155  (1838)  ;  IBhin.  (Pa.)  194  (1806)  ;  4  Desau. 
(S.  C.)  65  (1809),  369(1813)  (for  several  years),  555  (1815) ;  Harp. 
Eq.  (S.  C.)  224  (1824)  ;  1  Munf.  (Va.)  183  (1810)  ;  contra,  6  Jones  Eq. 
(N.  C.)  280  (1862)  ;  101  N.  C.  461  (1888)  ;  1  Desau.  (S.  C.)  191  (1791). 


48  THE    LAW    OF    INTEREST. 

If  the  sum  they  retain  is  reasonable  in  amount  and  they 
keep  it  on  hand  to  pay  debts  with,  or  for  a  general  settle- 
ment even,  they  will  not  be  liable  to  pay  interest  there- 
on. ^ 

They  should  deposit  the  money  in  a  bank  if  one  is  con- 
venient, and  they  are  compelled  to  retain  it  for  a  consid- 
erable length  of  time,  whether  under  order  of  court  or 
not;^  otherwise  they  may  be  liable  to  pay  interest  on  it 
on  the  ground  of  keeping  it  an  unreasonable  length  of 
time,  even  though  they  have  received  no  income  or  benefit 
from  it  for  themselves.^ 

If  they  mingle  the  funds  with  their  own,  or  with  those 
of  a  firm  with  which  they  are  connected,  it  is  presumed 
that  the  money  is  used  in  their  own  business,  or  in  that  of 
the  firm,  and  that  they  received  profit  therefrom,  and  they 
will  be  charged  with  interest,  although  it  is  shown  that 
they  have  received  no  benefit  from  it,  because  they  might 
have  invested  the  money  and  obtained  interest  thereon.* 
In  such  cases  they  will  be  charged  simple  interest  only, 
though  a  court  of  equity  may  change  the  rate  to  a  less  per 
cent,  as  justice  requires.^  And,  if  they  mingle  and  loan 
the  funds  with  their  own,  in  good  faith,  disclosing  all  the 
profits,  and  without  fault  or  want  of  prudence,  sulfer  some 
losses,  but  claim  no  deduction  therefor,  and  nothing  for 
their  services,  when  such  interest  exceeds  what  they  actu- 
ally received  on  the  funds,  and  the  money  has  not  been 

'  2  Dev.  Eq,  (N.  C.)  535  (1834). 

2  21  Mcl.432  (18G3). 

3  10  Md.  352  (185G)  ;  21  Md.  432  (1863)  ;  24  Pa.  St.  180  (1854)  ;  61  Vt. 
254  (1888).  la  the  latter  case  the  executor  kept  the  funds,  ainouutin<; 
to  seven  hundred  dollars,  idle  for  several  years,  though  he  might  have 
easily  deposited  tliein  in  a  bank  that  was  near,  at  four  per  cent  interest. 
He  was  charged  with  that  amount  of  interest  therefore  on  equitable 
grounds. 

*  52  Cal.  403  (1877)  ;  60  Cal.  180  (1884)  ;  83  Cal.  423  (1890). 

*  24  Pa.  St.  180  (1854)  ;  01  Vt.  254  (1888). 


INTEREST    ALLOWED    AS    DAMAGES.  40 

used  ill  business,  trade  or  speculation,  tliey  will  be  charged 
only  with  simple  interest.^ 

Investments.  It  was  once  doubted  if  executors  were 
chargeable  with  interest,  when  the  property  was  not 
directed  by  the  testator  to  be  put  to  interest,  but  it  is  now 
settled  that  they  are.-  As  when  a  testator  in  his  will 
directed  that  a  certain  sum  of  money  should  be  taken 
from  his  estate  and  be  retained  in  the  hands  of  his  execu- 
tor for  the  purpose  of  paying  certain  annuities  and  lega- 
cies, to  be  kept  at  interest  so  long  as  such  annuities  and 
legacies  should  become  payable,  the  executor  was  charge- 
able with  interest  on  the  fund,  being  credited  with  the 
amount  paid  on  such  annuities  and  legacies,  and  a  compen- 
sation for  his  services.^  When  an  executor  was  authorized 
by  will  to  sell  real  estate,  and  invest  the  proceeds,  he  kept 
the  money,  failed  to  invest,  and  was  held  to  pay  interest 
with  annual  rests,  compounded.^  So  where  a  will  provided 
that  the  interest  of  a  fund  should  be  collected  from  time 
to  time  and  invested,  the  court  presumed  that  the  execu- 
tor did  so,  and  held  him  responsible  for  interest.^  And, 
although  executors  are  not  expected  to  pay  so  much  atten- 
tion to  investments  as  trustees,  yet  they  must  not  keep  the 
funds  unemployed  for  a  great  length  of  time.  Six  months 
has  been  held  to  be  a  reasonable  time  in  which  to  make 
investments,'^  although  the  length  of  time  will  vary  under 
different  circumstances. 

•  59  Vt.  348  (1887)  ;  also,  3  B.  Mon.  (Ky.)  C45  (1843),  where  an  ex- 
ecutor, who  used  the  funds  of  the  estate  to  carry  on  a  large  manufact- 
uiing  business  of  the  testator,  was  required  to  pay  interest  on  the 
funds  so  employed. 

*  12  Conn.  350  (1837). 
3  12  Conn.  350  (1837). 
^71  111.  72  (1873). 

^  5  Dana  (Ky.)   70  (1837). 
6  2  Wend.  (N.  Y.)  77  (1828). 
4 


50  THE    LAW    OF   INTEREST. 

If  cxeeutois  mix  trust  funds  with  their  own,  or  neglect 
to  keep  account  of  the  investments  and  receipts  of  interest, 
they  are  chargeable  with  interest,  as  though  they  liad  kept 
the  fund  invested  upon  interest  payable  periodically,^ 
under  the  New  York  practice. 

Parol  evidence  is  admissil)le  against  executors  to  rel)ut 
an  equity  arising  out  of  their  obligation  to  invest  funds  so 
as  to  make  interest.- 

If  e'xecutors  neglect  to  obtain  an  order  to  invest  in  bank 
stocks,  they  are  not  exempt  from  paying  interest  on  the 
ground  of  laches  in  the  beneficiary  in  not  demanding  pay- 
ment.^ 

Where  an  executor  is  liable  to  be  called  upon  at  any  time 
to  pay  a  legacy,  and  there  are  no  directions  to  put  it  at 
interest,  he  is  not  chargeable  with  interest,  unless  he  has 
used  the  money  in  his  business,  or  loaned  it,  or  mingled  it 
with  his  own.^ 

Where  executors,  instead  of  investing  money  for  the 
benefit  of  the  testator's  widow  for  her  life,  as  directed  by 
the  will,  retain  a  debt  due  to  the  estate  from  themselves 
for  the  purchase  price  of  land,  and  pay  the  interest,  they 
are  not  accountable  to  the  estate  for  interest  on  such  debt.^ 

If  they  allow  property  to  be  taken  and  sold  on  execu- 
tion, the}^  will  be  responsible  for  interest  from  the  date  of 
the  writ  in  the  suit  or  proceeding  in  which  it  is  sought  to 
be  recovered/' 

Compound  interest.  An  executor  will  not  lie  charged 
with  compound    interest  on    the   final    settlement  of  his 


'  2  Wend.  (X.  Y.)  77  (1828)  ;  2  Barl).  Ch.  (N.  Y.)  211  (18-t7). 

2  2  Hill  Ch.  (S.  CO  HG  (1835). 

3  9  Rich.  Eq.  (S.  C)  279  (1857). 
«  4  Ilarr,  (N.  J.)  108  (1842). 

»  24  Atl.  Rop.  (Pa.)  G2t  (1892). 
«5  Pick.  (Mass.)  05  (1827). 


INTEREST    ALLOWED    AS    DAMAGES.  51 

account  in  equity,  unless  it  is  clearly  shown^  that  he  has 
been  guilty  of  such  gross  neglect  that  it  would  be  evidence 
of  a  corrupt  intention. ^  If  an  executor  refuses  to  render 
an  account  of  the  use  which  he  has  made  of  the  money  in 
his  hands,  but  claims  it  as  his  own,  he  is  chargeable  with 
compound  interest,  vrith  annual  rests,  from  the  time  when 
he  ought  to  have  settled  his  account.^  Compound  inter- 
est will  also  be  allowed  in  a  decree  for  an  accounting,  by 
way  of  damages,  for  persistently  and  wronoffully  refusino- 
to  account.* 

An  executor  has  no  power  to  bind  the  estate  to  pay 
compound  interest,  except  when  the  principal  sum  origin- 
ally due,  Avith  simple  interest,  is  charged  to  the  estate.^ 

Profits.  Executors  are  not  allowed  to  make  any  profit 
from  the  estate  for  themselves,  or  to  become  personally 
benefited  thereby.*'  If  they  have  made  interest  from  the 
estate,  they  must  pay  it  over  to  the  parties  entitled  to 
receive  it  upon  final  settlement  ;^  and  so  they  may  be 
obliged  to  pa-y  more  than  compound  interest,  even.^  If 
the  interest  received  is  nsurious,  will  they  be  oblio-ed  to 
pay  it  over,  when  no  action  has  been  brought  by  the  party 
who  had  paid  it  to  recover  it  under  a  statute  of  usury  ? 
However  that  may  be,  they  are  personally  liable  to  the 
statutory  forfeiture,  or  other  penalty,  for  receiving  the 
usurious  interest,  though  they,  at  the  time  of  its  receipt, 
supposed  it  to  be  legal  interest.'^ 


'  45  Barb.  (N.  Y.)  182  (1SG5). 

'^SS  Ala.  695  (1863). 

MO  Pick.  (Mass.)  77  (1830). 

*40  Mich.  457  (1879). 

^85  Va.  76  (1888). 

«1  Pick.  (Mass.)  530  (1823). 

7 1  Vorn.  (Eng.)  197  (1683)  ;  5  J.  J.  Mar.  (Ky.)  35  (1835). 

871  Pa.  St.  106  (1872). 

»7  Allen  (Mass.)  50  (1863). 


52  THE    LA^V    OF   INTEREST. 

Interest  received  on  the  amount  of  legacies  goes  into 
the  general  assets  of  the  estate.^ 

Rale-  Executors  are  ahva3's  chargeable  with  at  least 
the  rate  of  interest  that  they  have  nuule.-  If  they  have 
made  less  than  the  legal  rate,  when  with  due  diligence 
they  might  have  made  at  least  that,^  they  will  bo  liable  to 
pay  the  legal  rate.*  So  if  the  executors  are  silent  as  to 
what  were  the  proceeds  on  the  sale  of  a  certain  bond,  the 
court  will  charge  them  with  the  highest  market  value  of 
the  bond,  and  the  legal  rate  of  interest/ 

Liahilily  of  executors'  executors.  Upon  the  balance 
due  at  the  time  of  an  executor's  death,  interest  will  not  be 
charged  until  some  one  is  authorized  to  receive  it.*^ 

Accounting.  There  is  no  general  rule  charging  execu- 
tors with  interest  in  accounting,^  except  that  they  are 
chargeable  on  annual  balances,^  that  is,  on  such  part  of 
them  as  are  necessarily  kept  in  their  hands  for  the  purposes 
of  the  estatCj^as  to  meet  demands  that  will  fall  due  within 
the  current  year,  or  if  the  amount  of  the  balance  is  small. ^° 
They  may  be  allowed  interest  on  balances  in  their  favor." 

Where  an  executor's  account  consists  of  many  small 
items,  commissioners  arc  allowed  to  ascertain  the  amount 
for  the  year  and  reckon  interest  from  the  middle  of  the 
year  on  the  whole  of  it.^^ 

';5n:irr.  (N.J.)  59  (1840). 
=  1  rick.  (Mass.)  530  (1823). 

3  12  Conn.  350  (1837)  ;  7  S.  &  R.  (Pd.)  2G4  (1821). 
<24Pa.  St.  180  (1854). 
*53  VI.  6C0  (1881). 
«9Rich.  Eq.  (S.  C.)  71  (185G). 
M  AVusb.  (Va.)  246  (1793). 
83  1)esau.  (S.  C.)  241  (1811). 

»24  Pa.  St.  335  (1855);  3  Desau.  (S.  C.)  241  (1811);  Riley  (S.  C.)  38 
(1837). 
'"  G  Leigh  (Va.)  271  (1835). 

"  3  Desau.  (S.  C)  241  (1811)  ;  2  Call  (Va.)  102  (1799). 
»« 2  Dev.  &  Bat.  Eq.  (N.  C)  155  (1838). 


INTEREST    ALLOWED    AS    DAMAGES.  53 

If  executors  are  not  charged  with  interest  the  account 
may  be  surcharged  ;^  and  they  may  be  charged  with  inter- 
est in  the  decree  on  the  final  account,  though  they  had  had 
a  previous  account  confirmed  in  which  they  were  charged 
with  the  principal  without  interest.^  Executors  are  not 
charged  with  interest  before  decree,  if  the  failure  to  account 
was  the  fault  of  the  legatees,  that  is,  the  legatees  can  reap 
no  benefit  thereby.^ 

Executors  are  chargeable  with  interest  on  the  balance 
of  a  former  account  settled  by  them  in  the  court,  although 
it  was  in  part  made  up  of  interest  on  the  balance  of  a  still 
earlier  account  then  settled.* 

Executors  are  chargeable  with  interest  on  the  sums 
ascertained  to  bo  in  their  hands,  during  the  pendency  of 
exceptions  to  their  accounts.^  After  the  final  accounting, 
interest  on  the  balance  in  their  hands  is  allowed  during 
the  pendency  of  their  appeal  from  an  order  disallowing 
their  alleged  credits  for  money  paid  on  illegal  claims.^ 

Eests  in  accounts  against  executors  are  not  allowed 
except  in  particular  cases. ^  If  they  greatly  delay  in 
accounting  they  will  be  charged  with  interest  with  annual 
rests. ^  There  is  no  certain  rule  as  to  rests  f  but  they  are 
generally  allowed  annually. ^° 

Interest  on  distributive  shares.  When  the  time  arrives 
for  the  executors  to  make  a  final  settlement  of  the  estate 

'  3  Leigh  (Va.)  348  (1831). 
^22  Pa.  St.  445  (1854). 
3  1  Munf.  (Va.)  150  (1810). 

*  10  Pa.  St.  408  (1849)  ;  contra,  2  Hill  Ch.  (S.  C)  492  (183G) ;  1  Wash. 
(Va.)  246  (1793). 
"13  Pa.  St.  575  (1850). 
6  76  Mich.  318  (1889). 
'2  McC.  Ch.  (S.  C.)  1,  185  (1827) 
8  74Cal.  199  (1887). 
97  B.  Mon.  (Ky.)  176  (184C). 
^''74  Cal.  199  (1887)  ;  20  Fla.  2G2,  292  (1883). 


54:  THE    LAW    OF    INTEREST. 

they  must  do  so;  uiid  if  they  pay  within  a  reasonable 
time  thereafter  they  will  not  be  compelled  to  pay  interest  ;^ 
otherwise,  they  will  be  charged  from  the  time  when  they 
should  have  paid  it.^  But  if  the  settlement  is  delayed 
without  negligence  on  their  part  they  will  not  be  liable  for 
interest,  unless  they  have  used  the  funds  or  made  profit 
from  them.^  If  executors  are  ordered  by  the  court  to  pay 
a  share,  they  will  be  chargeal)le  with  the  interest  they 
have  received  on  it  from  the  time  of  the  order.* 

A  residuary  legatee  is  not  chargeable  with  interest  on 
notes  given  by  executors  for  funds  of  the  estate,  after  final 
settlement  where  they  constitute  part  of  the  assets.^  But 
such  legatees  are  charged  with  interest  on  legacies  though 
they  are  not  demanded  for  many  years.*^ 

Executors  are  bound  to  inform  a  guardian  of  the  exact 
sum  due,  and  to  pay  it  over  without  deduction  or  delay, 
and  where  they  delay  payment  for  several  years,  Avithout 
just  cause,  they  must  pay  interest.^  But  they  must  have 
notice  that  a  guardian  has  been  appointed.^ 

Executors'  own  debts.  Executors  have  no  right,  on 
taking  out  letters  testamentary,  to  make  a  rest  in  the  com- 
putation of  a  debt  due  them  from  the  estate,  so  as  to  charge 
interest  on  interest.  But  they  may  charge  interest  on 
interest  that  they  would  have  received,  but  for  the  wrong- 
ful issuing  of  an  injunction.^ 

Legacies.     After  a  legacy  becomes  due,  mere  readiness 

'31  P;i.  St.  4-t  (1857). 

- 140  JIass.  351  (1885). 

m  rick.  (Mass.)  371  (1831). 

*2G  IoAva525  (18G8). 

^  14  Ore.  171  (1886).         ^ 

«1  Grat.  (Va.)  292  (1844). 

7 1  Paige  (N.  Y.)  479  (1829)  ;  28  Va.  St.  37G  (1857). 

■^S.Munf.  (Va.)  198  (1812). 

9  9  Paige  (X.  Y.)  4C1  (1842). 


INTEREST   ALLOWED   AS   DAMAGES.  55 

to  pay  it  will  not  excuse  the  executor  from  paying  interest 
upon  it.^  And  where  an  executor  determined  not  to  [)ay 
the  legacies  until  the  estate  could  be  made  available 
without  a  sacrifice,  he  was  obliged  to  pay  interest  on  a 
general  legacy  to  a  married  Avoman,  although  she  had  no 
trustee  to  act  for  her.^  But  an  executor  is  not  liable  to 
pay  interest  on  a  legacy  due  to  infant  legatees,  no  time  of 
paj'ment  being  specified,  until  guardians  are  appointed 
and  the  executor  is  notified  of  such  appointment,  unless 
he  has  received  interest  on  the  money  or  might  have 
received  it  without  hazard.^ 

If  an  executor  pays  a  legacy  after  it  is  barred  by  the 
statute  of  limitations,  he  must  pay  interest  thereon  from 
the  time  of  the  payment  (misappropriation)  of  the  money.* 
So,  if  he  pays  it  to  the  wrong  party  ;^  or,  pays  a  debt  due, 
as  he  supposes,  to  himself,  but  which  the  court  afterward 
disallows.^  In  the  latter  case,  he  is  chargeable  with  simple 
interest  while  it  is  in  litigation,  and  after  that  time  with 
compound  interest.^ 

At  common  law,  a  refusal  by  a  legatee's  husband  to 
accept  a  legacy  stops  interest  on  it.^ 

Advances.  A  similar  rule  prevails  as  to  the  payment 
of  interest  on  advances  made  by  executors  as  on  those  by 
administrators.  In  some  cases,  executors  are  allowed 
interest  on  advances  made  by  them  under  particularly 
necessitous  circumstances,^  as  to  prevent  the  foreclosure 

'  24  Pa.  St.  310  (1855). 

M3  Ala.  554  (1848). 

39  Vt.  41  (1837). 

^  71  Ala.  169  (1881). 

^  19  Conn.  548  (1849). 

M9  Conn.  519  (1882). 

M9  Conn.  519  (1882). 

»  4  Call  (Va.)  605  (1803). 

»  9  Virgin  (Me.)  411  (1872)  ;  90  Tenn.  359  (1891). 


56  TOE    LAW    OF    INTEREST. 

of  a  mortgage.^  But,  when  Ihcro  are  huuh  of  the  estate 
that  are  subject  to  the  executors'  control,  the  policy  of  the 
law  is  against  such  allowance  of  interest,'-  and  they  are  not 
allowed  interest.^  If  such  advance  is  made  the  executors 
i^hould,  as  soon  as  they  can  do  so,  apply  the  money  of  the 
estate  to  the  satisfiiction  of  the  claim  Avliich  they  have 
created  against  the  estate  in  their  own  favor.  So,  on  the 
same  grounds,  executors  have  no  authority  to  borrow 
money  for  the  use  of  the  estate,  and  Avill  not  be  allowed 
interest  on  it  if  they  do  borrow.* 

Executors  may  receive  compound  interest  on  advances 
on  the  principle  of  rests.^ 

(g)  Garnishees,  interpleaders,  etc.  A  garnishee  occu- 
pies his  position  compulsorily,  and  without  pay,  and  he 
is  to  be  treated  very  leniently.  If  the  claim  is  drawing 
contractual  interest,  the  interest  does  not  stop  running 
when  trusteed,  it  being  a  part  of  the  debt,  running 
ri"-ht  along  during  the  pendency  of  the  suit,  until 
maturity,  and  passing  to  the  principal  defendant  in  the 
action.'^  In  the  case  of  interest  that  could  be  collected, 
if  at  all,  as  damages,  the  rule  is  dillcrent.  In  fact 
there  is  a  multiplicity  of  rules  that  have  ])een  adopted 
by  different  courts.  Some  say  there  is  no  presumption, 
and  that  every  case  must  stand  or  fall  according  to  the 
facts,  as  in  Ohio,  where  the  garnishee,  during  the  pen- 
dency of  the  process,  is  not  thereby  necessarily  exempted 
from  paying  interest  on  the  del)t,  the  cause  of  exemption 

•  10  rick.  (Mass.)  77  (1830). 

2  10  rick.  (Mass.)  77  (1830). 

3  20  Mil.  282  (18G3). 

*5  Nev.  18D  (18C9)  ;  90  Teiiii.  359  (1891),  in  -wbicli  case  usurious 
interest  paid  was  not  allowed. 

MG  Mass.  221  (1819). 

«  1  Spauld.  (Me.)  213  (1880)  ;  5G  Vt.  302  (1883).  Sec  3  II.  &  M'll. 
(Md.)  124(1793). 


INTEREST   ALLOWED   AS   DAMAGE.  fj7 

not  being  presumed,  and  the  garnishee  being  compelled 
to  show  it  like  any  other  defence. ^  Most  of  the  courts  hold, 
however,  that  the  money  remains  in  statu  quo  during  the 
pendency  of  the  action,  and  the  trustee  is  not  liable  to  pay 
interest  for  that  time,^  provided  that  he  has  not  used  the 
money ,^  and  there  is  no  fraud,  collusion,  unreasonable 
delay,  or  litigation  on  the  part  of  the  trustee,*  and  that  he 
is  ready  and  willing  to  pay  the  amount  due  whenever 
required  to  do  so.^  In  Missouri,  the  trustee  must  acknow- 
ledge his  indebtedness  and  readiness  to  pay  in  court,  if  he 
would  be  relieved  from  the  payment  of  interest.^  In  Ala- 
bama, Georgia,  Iowa,  Kentucky,  Maryland  and  Virginia, 
he  must  pay  the  money  into  court  ;^  and  that  is  the  safest 
thing  for  a  trustee  to  do  everywhere.®  The  court  in  Illi- 
nois holds  that  he  must  pay  it  into  court  or  to  the  party 
entitled  to  it.'' 

So,  when  a  trustee  does  not  offer  to  bring  the  mone}''  into 
court,  etc.,  but  insists  upon  his  own  right  to  retain  it  as 
against  both  plaintiff  and  defendant  he  Avill  be  charged  in- 
terest if  it  is  decided  that  he  has  no  risfht  or  title  to  it.  ^° 

>  9  0.  St.  452  (1859). 

2  15  ^y.  R.  (Eng.)  371;  9  Wheat.  (U.  S.)  738  (1824);  35  Ala.  143 
(1859) ;  28  Cal.  539  (1865) ;  8  Pick.  (Mass.)  260  (1829)  ;  4  Met.  (Mass.) 
1  (1842)  ;  5  Allen  (Mass.)  356  (1862)  ;  105  Mass.  340  (1870) ;  129  Mass. 
322  (1880)  ;  131  Mass.  294  (1881)  ;  4  Halst.  (N.  J.)  8  (1827)  ;  43  Pa.  St. 
488  ri8G2)  ;  44  Pa.  St.  82  (1862)  ;  26  Vt.  119  (1853). 

3  25IoAva336  (1868). 

*  2  Dall.  (Pa.)  215  (1793)  ;  64  Pa.  St.  63  (1870)  ;  99  Pa.  St.  317 
(1882). 

*  1  Ga.  38  (1846) ;  1  Spauld.  (Me.)  213  (1880)  ;  4  Mass.  170  (1808) ; 
4  Met.  (Mass.)  1  (1842)  ;  9  Pa.  St.  468  (1848). 

6  9  Mo.  636  (1845). 

''  30  Ala.  227  (1857),  if  he  is  not  restrained  from  using  it;  74  Ga.  4 
(1884)  ;  60  Iowa  510  (1883)  ;  1  Dana  (Ky.)  338  (1833)  ;  1  Bland  (Md.) 
333  (1827)  ;  4  Hen.  &  Munf.  (Va.)  259  (1809). 

8  64  Pa.  St.  63  (1870) 

9  56111.  362  (1870). 

10  7  Ala.  217  (1844). 


58  THE    LAW    OF    INTEREST. 

AVliere  a  tlel)toi'  promised  his  creditor  that  at  the  debt's 
maturity  he  would  pay  over  the  money  to  a  trustee  to 
await  the  result  of  a  garnishee  suit,  and  the  debtor  did 
not  do  so,  he  was  held  liable  for  interest.^  So  where  two 
clainiMiits  of  money  agreed  that  the  holder  of  it  should 
deposit  it  in  a  bank  to  remain  there,  subject  to  a  decision 
of  the  court.  The  money  was  duly  deposited,  but  shortly 
afterward  the  holder  took  it  out  of  the  bank;  and  it  was 
decided  that  he  must  pay  interest  on  it.- 

A  party  receiving  funds  deposited  in  court,  to  which 
he  is  entitled,  is  not  chargeable  with  interest  thereon.^ 

Using  (he  funds.  If  the  trustee  uses  the  mouey  or 
receives  a  profit  from  it  during  the  pendency  of  the  action, 
he  should  be  charged  Avilh  interest;*  and  it  has  been  held, 
in  the  case  of  a  bank,  that  there  is  a  presumption  that  it 
has  been  used.^  lie  will  not  be  obliged  to  pay  interest  if 
he  has  simply  mingled  the  funds  with  his  own,  provided 
he  is  able  to  pay  at  any  time.*' 

Comj)ound  interest.  If  a  garnishee  uses  the  funds  as 
his  own,  and  has  not  on  hand  at  times  as  much  as  he  owed 
the  defendant,  therefore  not  being  able  to  pay  it  at  any 
moment  when  called  upon,  the  Connecticut  court  holds 
that  he  must  pay  compound  interest.^ 

Dilatory  j^roceedings.  If  a  garnishee  simply  answers, 
admitting  an  indebtedness,  and  submitting  to  the  jurisdic- 

'  IG  Fla.  510  (1878). 

*3  15inn.  (Pa.)  121  (1810). 

=*  18  Neb.  608  (188G). 

*  20  How.  (U.  S.)  128  (1857) ;  35  Conu.  97  (1868)  ;  40  Conn.  464 
(1873) ;  1  Ga.  38  (1846)  ;  25  Iowa  336  (1868)  ;  19  S.  W.  Rep.  (Ky.)  185, 
841  (1892)  ;  18  Me.  332  (1841)  ;  45  Me.  542  (1858)  ;  1  SpauUl.  (Me.)  213 
(1880)  ;  4  Mass.  170  (1808)  ;  8  Tick.  (Mass.)  2G0  (1829)  ;  4  Met.  (Mass.) 
1  (1842)  ;  9  Pa.  St.  408  (1848)  ;  3  Rand.  (Va.)  434  (1825). 

<■  19  S.  W.  Rep.  (Ky.)  841  (1892)  ;  3  Rand.  (Va.)  434  (1825). 

«  40  Conn.  464  (1873)  ;  4  Met.  (Mass.)  1  (1842). 

7  35  Conn.  97  (1868). 


INTEREST   ALLOWED   AS   DAMAGES.  59 

tion  of  the  court,  he  can  raise  the  question  of  his  liability  for 
interest  while  the  debt  is  suspended  by  litigation.  But 
when  a  garnishee  interposes  a  dilatory  plea,  he  cannot  raise 
the  question  of  his  liability  for  interest  during  the  pen- 
dency of  the  action.^  But,  pending  a  certiorari  and  bill  in 
equity,  even  though  the  debtor  has  mixed  the  funds  with 
his  own  and  derived  some  benefit  from  them,  he  will  not 
be  chargeable  with  interest. - 

Abatement  of  process.  If  the  process  is  dissolved 
without  the  payment  of  the  money  to  the  creditor,  the 
debtor  cannot  claim  interest  of  the  trustee  during  the  time 
of  the  pendency  of  the  action,  because  the  debtor  and  not 
the  trustee  is  the  person  who  caused  the  funds  to  be  locked 
up  in  the  hands  of  the  trustee.^ 

But  a  void  process  does  not  relieve  the  garnishee  from 
paying  interest.* 

Payment.  A  trustee  under  the  trustee  process  must 
regard  his  payment  under  the  judgment  in  the  suit  as  a 
partial  payment  made  to  his  creditor  and  reckon  interest 
accordingly.^ 

Literpleading .  The  plaintiff  in  an  interpleader  suit  is 
not  lial)le  to  pay  interest  after  payment  of  the  fund  into 
court  during  the  litigation  between  the  defendants.^  If 
the  interpleading  is  defective,  however,  and  the  inter- 
pleader causes  the  rightful  owner  to  be  kept  out  of  his 
money  for  some  time,  he  must  pay  interest.^ 

Injunctions.  If  a  debtor  is  estopped  from  paying  a  debt 

'  30  Ala.  6G8  (1857). 
^SEdw.  (N.  Y.)  512  (1841). 

3  32  Ga.  20  (18G1)  ;  60  Iowa  510  (1883)  ;  2G  Vt.  119  (1853). 
^Gl  Ga.  lOG  (1878). 
^30N.  H.  531  (1855). 

«  4  CI.  &  r.  (Eng.)  016  (1837)  ;  11  Bli.,  N.  S.  (Eug.)  158  (1837)  ;  52 
N.  W.  Eep.  (Mich.)  631  (1892) ;  4  Geo.  (Miss.)  539  (1857). 
7  69  Cal.  133  (1886)-,  44  Mich.  25  (1880). 


60  THE    LAW    OF   INTEREST. 

])}'  an  injunction,  interest  is  suspended  from  the  service 
of  the  process  while  it  remains  in  force,  although  he  is 
not  a  party  to  the  bill  and  it  is  inoperative.^ 

(A)  Guardians.  As  long  as  guardians  are  reasonable 
in  caring  for  the  property  of  their  wards  they  are  not 
chargeable  with  interest.^ 

If  they  have  kept  funds  unemployed  an  unreasonable 
length  of  time,  when  they  might  have  made  them  produc- 
tive, they  will  be  charged  with  interest,^  even  if  they  do 
not  use  the  money  themselves.*  If  they  convert  the  funds 
to  their  own  use,  they  are  chargeable  with  the  highest 
rate  of  interest  that  they  could  have  obtained.^ 

If  the  funds  are  lost  through  their  negligence,'^  or  they 
mingle  them  with  their  own^  they  must  pay  interest. 

The  court  will  allow  fees  paid  to  an  attorney  for  services 
in  recovering  money  put  out  at  interest.^ 

Guardians  should  make  their  disbursements  from  the 
interest,  and  not  from  the  principal  of  the  funds,  otherwise 
they  will  be  charged  interest  on  the  interest  received.^ 

Investments.  Guardians  must  be  allowed  a  reasonable 
time  for  investing  the  funds, ^°  six  months  being  generally 


»  4  Halst.  (N.  J.)  3  (1827)  ;  13  Wend.  (N.  Y.)  639  (1835). 

2  18  Pick.  (Mass.)  1  (183G)  ;  1  Cush.  (Mass.)  189  (1851);  17  N.  H. 
458  (1845)  ;  41  Pa.  St.  494  (1SG2). 

3  12  Ala.  354  (1847)  ;  1  Pick.  (Mass.)  527  (1823) ;  45  Mich.  2G5  (1881)  ; 
43  N.  II.  4G5  (18G2)  ;  2  Grant's  Cas.  (Pa.)  341  (185G). 

*55  Cal.  137  (1880). 

*90Ind.  105  (1883). 

MOMiss.  7G5  (18GG). 

»53Pa.  St.  500  (1866). 

8  29  Ga.  82  (1859). 

»  29  Ga.  82  (1859) ;  6  Dana  (Ky.)  G  (1837)  ;  2  Grant's  Cas.  (Pa.)  341 
(1856). 

"»  6  Dana  (Ky.)  5  (1837) ;  18  Pick.  (Mass.)  1  (1836) ;  45  Midi.  265 
(1881)  ;  31  Minn.  342  (1883)  ;  43  N.  II.  405  (1802)  ;  GO  N.  II.  179  (18S0)  ; 
4  S.  &  II.  (Pa.)  112  (1818);  41  Pa.  St.494  (1802);  53  Pa.  St.  500  (1866). 


INTEREST    ALLOWED    AS    DAMAGES.  61 

considered  as  about  rio-ht.^  If  investments  are  made  at 
less  than  the  legal  rate  of  interest,  guardians  are  charge- 
able with  the  legal  rate,  unless  the  rate  received  is  a  rea- 
sonable one  under  the  circumstances. - 

Comjjound  interest.  Compound  interest  is  allowed, 
not  to  punish,  but  to  reach  the  profits,  which  under  the 
facts  disclosed  the  guardians  have  made.^  As  a  rule  they 
should  not  be  charged  with  compound  interest  ;*  but  if 
tliey  have  been  guilty  of  gross  delinquency,  or  malfeas- 
ance,^ or  have  used  the  funds  for  their  own  profit,'^  they 
must  pay  compound  interest,  with  annual  rests. ^  A  guar- 
dian is  chargeable  with  interest  on  the  accumulated  bal- 
ance of  principal  and  interest  annually,  after  deducting 
the  necessary  expenditures  for  the  ward,  unless  he  shows 
to  the  satisfaction  of  the  court  such  equitable  circumstances, 
as  ought  in  conscience  to  acquit  him  of  his  accountability 
[\>v  such  interest,^  being  unable  to  realize  it. 

If  the  sum  of  money  on  hand  is  small,  however,  only 
simple  interest  will  be  charged,  as  such   careful  attention 

'  23  Pa.  St.  44  (1854)  ;  2Graut's  Cas.  (Pa.)  341  (185G)  ;  5",  Pa.  St.  500 
(18G6);  12Grat.  (Va.)  608  (1855). 
*33  111.  212  (1864)  ;  41  Pa.  St.  494  (1862). 
'  52  Tex.  84  (1879). 

*  56  IMich.  508  (1885)  ;  73  Mich.  220  (1889)  ;  Hopk.  (X.  Y.)  424  (1825). 

*  46  Ala.  153  (1871)  ;  49  Ala.  237  (1873)  ;  29  Ga.  82  (1859)  ;  18  Pick. 
(Mass.)  1  (1836)  ;  5  Pa.  St.  87  (1847)  ;  53  Pa.  St.  500  (1866). 

6  14  111.  1  (1852)  ;  Hopk.  (N.  Y.)  424  (1825)  ;  4  S.  &  K.  (Pa.)  112 
(1818). 

7  85  Cal.  93  (1890) ;  29  Ga.  82  (1859).  lu  the  latter  case  the  court 
sa5'S  that  rests  should  be  taken  ouce  in  six  years.  In  Kentucky,  two- 
year  rests  are  generally  allowed  (3  Met.  (Ky.)  555  (1861),  and  if  it  is 
a  testamentary  guardian  three-j'car  (5  Dana  (Ky.)  594  (1837). 

»  Law  Repos.  (N.  C.)  230  (1815)  ;  1  Rob.  (Va.)  196  (1842)  ;  contra, 
56  Mich.  508  (1885),  which  says  that  guardians  are  liable  only  for  sim- 
ple interest,  unless  there  is  shown  such  a  state  of  facts  as  ought  to  make 
them  chargeable  for  compound  interest,  and  the  burden  of  proving 
those  facts  is  on  the  ward. 


62  THE    LAW    OF    INTEREST. 

would  not  be  given  generally  to  a  small  sum  as  to  a  large 
one.^ 

A  failure  to  make  a  return  of  interest  received  is  not  suf- 
ticient  in  itself  to  prove  fraud,  or  to  make  the  ollending 
party  chargeable  with  compound  interest. - 

Profits.  AVhatever  interest  guardians  make  or  receive 
they  must  pay  over  to  the  estate,  though  it  l)e  compound 
interest.^  If  guardians  use  the  trust  funds  in  a  trade  or 
venture  of  their  own,  whether  they  keep  them  separate,  or 
mix  with  them  their  private  money,  and  notwithstanding 
difficulties  may  arise  in  the  latter  case  in  taking  the  ac- 
counts, the  ward,  if  he  prefers  to  do  so,  may  insist  upon 
having  the  profits  made  by,  instead  of  legal  interest  upon 
the  amount  of,  the  trust  funds  so  employed.* 

Accounts.  Guardians'  accounts  should  be  rendered  an- 
nually ■■'  the  interest  for  each  year  being  added  to  the 
principal ;  and  tlie  i)aymcnts  for  debts  and  other  charges 
against  the  estate  should  be  taken  annually  from  such  sum, 
the  balance  being  the  new  principal  for  the  next  year." 
Guardians  can  make  monthly  rests  if  they  wish,  but  they 
must  adopt  the  same  principle.^  The  balance  of  each  ac- 
count is  carried  forward  and  interest  is  allowed  on  that. ^ 

The  court  in  Penusylwania  says  that  a  reasonable  rule 
is  to  strike  a  balance  of  the  money  in  the  hands  of  the 

»  1  Pick.  (Mass.)  527  (1823). 

-  29  Ga.  82  (1859). 

3  47  Ala.  314  (1872)  ;  73  Mich.  220  (1889)  ;  17  N.  H.  458  (1845)  ;  Ilopk. 
(N.  Y.)  424  (1825)  ;  7  W.  &  S.  (Pa.)  48  (1844)  ;  Sp.  !•  q.  (S.  C.)  309 
(1843). 

*  33  111.  212  (18C4). 

"33  111.  212  (18G4). 

«  12  Ala.  354  (1847)  ;  33  111.  212  (1804)  ;  6  Iowa  123  (1858)  ;  39  loTva 
C81  (1874)  ;  C4  Iowa  391  (1884)  ;  1  Pick.  (Mass.)  527  (1823)  ;  18  Pick. 
(Mass.)  1  (183G) ;  47  N.  II.  88  (18G6). 

'  109  Mass.  252  (1872). 

»  77  Wis.  GGC  (1890). 


INTEREST   ALLOWED   AS   DAMAGES.  63 

guardian  at  the  end  of  every  six  months,  and  to  charge 
him  with  simple  interest  on  that,  allowing  a  reasonable  sum 
for  contingent  expenses  ;^  but  that  the  principle  of  rests 
must  not  be  adopted  if  it  is  a  mere  omission  or  neglect 
to  invest.^ 

If  a  guardian  charges  himself  with  compound  interest 
in  his  annual  accounts,  it  is  an  admission,  and  he  should 
not  be  relieved  from  it  unless  good  reason  is  shown. ^ 

When  items  of  money  advanced  are  disallowed  in  the 
account,  interest  is  allowed  to  the  guardian  to  offset  that 
charged  to  him  on  the  other  side  of  the  account.* 

If  the  question  of  interest  has  not  arisen  in  a  previous 
account  Avith  the  court,  the  guardian  can  be  charged  with 
interest  in  a  succeeding  account;  but,  if  the  question  has 
been  put  in  issue  and  decided  on  the  settlement  of  a  form- 
er account  it  cannot  be  revised  so  long  as  the  former  decree 
remains  in  force. ^ 

A  iruardian  is  not  chargeable  with  interest  on  the  funds 
in  his  hands  while  his  account  is  pending  before  an  audi- 
tor, and  during  the  pendency  of  exceptions  in  court,*'  un- 
less they  have  been  filed  at  his  instance,  in  which  case  he 
is.^ 

Approval  of  such  an  account  by  an  interested  party  does 
not  preclude  him  from  afterward  insisting  upon  interest.^ 

Termination  of  guardianship.  At  the  termination  of 
the  o-uardianship,  only  simple  interest  is  allowed  on  the 

*  4  S.  &  R.  (Pa.)  112  (1818).  The  court  in  Georgia  also  says  that  a 
guardian  can  retain  at  the  beginning  of  each  j-ear  enough  money  to 
cover  tlie  disbursements  of  that  year.     29  Ga.  82  (1859). 

Ml  Pa.  St.  494  (1862). 

3  4  Geo.  (Miss.)  553  (1857). 

*  152  Mass.  328  (1890). 

*  18Pic]j.  (Mass.)  1  (1836). 

6  46  Pa.  St.  347  (1863). 

7  23  Pa.  St.  44  (1854). 

8  18  Pick.  (Mass.)  1  (1836). 


64  THE    LAW    OF    INTEUEST. 

balance  rcmaininir  in  the  haiuls  of  the  guardian  ;  or  on  the 
money  afterward  received  by  him  ;  ^  or  after  the  infant 
Avard  marries  an  adult  husband.-  This  money  he  is  bound 
to  pay  over  to  his  ward  immediately  after  the  termination 
of  his  duty. 

If  the  guardian  lias  died,  compound  interest  should  be 
computed  only  to  his  death,  and  simple  interest  afterward,"^ 
unless  compound  interest  has  been  received.* 

AVhere  the  guardian  makes  a  final  settlement,  showing 
a  certain  amount  due  from  him  to  his  ward,  and  such  set- 
tlement is  approved  by  the  court,  the  guardian  and  his 
personal  representatives  are  estopped  to  deny  the  correct- 
ness of  the  report.^ 

Advances.  AVhen  a  guardian  advances  his  own  money 
in  payment  of  debts  or  expenses  of  his  ward,  under  such 
circumstances  as  render  that  course  of  proceeding  proper, 
he  is  entitled  to  interest  on  the  money  so  advanced.^ 

(i)  Indorsers.  Indorsers  are  liable  for  interest  on 
notes  as  a  matter  of  law  ;"  and  the  holder  can  recover  ac- 
cording to  their  tenor,  whether  he  paid  less  for  them  or  not.^ 
But  if  a  note  has  been  assigned,  the  assignee  cannot  re- 
cover of  the  assignor  more  than  the  latter  can  collect  of 
the  maker,  provided  he  is  solvent.^ 

>  31  N.  E.  Rep.  (111.)  589  (1892)  ;  9  B.  Mon.  (Ky.)  441  (1849)  ;  15  La. 
Ann.  417  (18G0) ;  2  Dev.  Eq.  (X.  C.)  478  (1833);  12  Grat.  (Va.)  G08 
(1855)  ;  contra,  29  Mo.  App.o95  (1888),  wbere  a  guardian,  Avho  failitl  to 
account  with  the  Avard  and  settle  for  five  years  after  maturity  of  the 
ward,  was  held  to  pay  compound  interest. 

*  13  W.  r.  D.  Bush  (Ky.)    17C  (1877). 

'  14  111.  1  (1852)  ;  1  Dev.  Eq.  (X.  C.)  38G  (1830). 

*  1  Dev.  Eq.  (N.  C.)  386  (1830). 

*  31  N.  E.  Ilcp.  (111.)  589  (1892). 
«  13  rick.  (Mass.)  272  (1872). 
^50Tenn.  223  (1873). 

«  19  Johns.  (N.  Y.)  244  (1821). 
"39  111.31  (1865). 


INTEREST   ALLOWED   AS   DAMAGES.  65 

(j)  Masters  in  chancenj.  If  masters  in  chancery 
receive  the  assets  of  the  estate,  and  are  ordered  by  the 
court  to  invest  them,  they  must  do  so  or  else  pay  inter- 
est.i 

(k)  Minors.  There  is  a  difference  of  opinion  as  to 
whether  infants  can  be  compelled  to  pay  interest,  either 
by  contract,  or  as  damages.  There  is  no  general  rule  ex- 
empting them,-  and  yet  the  trend  of  the  decisions  is  that 
they  cannot  be  obliged  to  do  so.^  In  the  English  case  of 
Fisher,  ex'x,  v.  Mowbray,'^  it  was  held  that  an  infant  can 
on  no  account  bind  himself  in  a  bond  with  a  penalty  condi- 
tioned for  the  payment  of  interest  as  well  as  principal. 

(l)  Municipal  corporations.  Interest  as  damages  on  ac- 
counts in  favor  of  the  United  States,  towns,  cities,  coun- 
ties, states  and  other  similar  corporations  runs  the  same 
as  it  does  ordinarily,  in  the  absence  of  statutes  to  the  con- 
trary ;^  but  such  bodies  and  corporations  arc  not  obliged  to 
pay  interest,  unless  there  are  statutes  to  compel  them.*' 
The  county  board  cannot  allow  it  f  and  no  agent  of  such  cor- 
porations can  contract  for  interest  unless  statutes  permit.^ 
Interest  is  allowed,  however,  on  money  illegally  exacted 

'  1  Desau.  (S.  C.)  115  (1785)  ;  Harp.  Eq.  (S.  C.)  47  (1824). 

-  23  Vt.  378  (1851). 

3  23  Vt.  378  (1851),  which  overruled  14  Vt.  405  (1842). 

■•SEast  (Eng.)  380  (1807). 

*  48  Ga.  115  (1873)  ;  56  111.  327  (1870)  ;  91  111.  49  (1878)  ;  95  111.  352 
(1880)  ;  GG  lud.  109  (1879)  ;  127  Ind.  204  (1890)  ;  2  Gush.  (Mass.)  475 
(1848)  ;  10  Tex.  315  (1853)  ;  30  Vt.  285  (1858). 

6  127  U.  S.  251  (1887)  ;  1  Scam.  (111.)  G7  (1832)  ;  11  111.  170  (1849)  ; 
2  Mich.  187  (1851)  ;  37  Mich.  351  (1877)  ;  71  Mich.  118  (1888)  ;  52  Miss. 
732  (187G)  ;  63  Miss.  148  (1870)  ;  64  Miss.  534  (188C)  ;  2  Ired.  Eq.  CX. 
G.)  444  (1843)  ;  36  O.  St,  409  (1881)  ;  13  Ore.  287  (1886)  ;  18  S.  C.  132 
(1882)  ;  15  Tex.  72  (1855)  ;  C07itra,  2  Dall.  (Pa.)  101  (1788).  The  court 
iu  1  Gush.  (Miss.)  505  (1852)  holds  that  the  state  is  bound  to  pay  in- 
terest if  she  claims  it. 

'  91  111.  49  (1878)  ;  95  111.  352  (1880). 

8  15  Tex.  72  (1855). 
5 


66  Tin:  law  of  interest. 

us  u  tax  ami  paid  uiuler  protest. ^  It  has  also  been  allowed 
in  several  instances  after  a  demand  has  been  made  ;'-  which 
in  case  of  a  state  nmst  he  made  on  the  legislatnre.^  The 
court  in  Xew  York  held,  in  1848,  that  this  question  of  mu- 
nicipal corporations'  lial)ility  for  interest  should  be  left  to 
the  discretion  of  the  court,  saying  that  there  is  no  reason 
why  interest  should  not  be  paid  by  the  slate.^ 

()n)  Officers.  A  pnblic  officer,  who  retains  money 
wrongfully,  is  chargeable  with  interest  during  such  deten- 
tion.'' A  defaulting  revenue  officer  is  bound  to  pay  inter- 
est to  the  United  States.*^  In  Louisiana  it  has  l)een  held 
that  a  curator  of  a  vacant  succession  mnst  pay  interest 
from  the  time  the  fund  should  have  been  paid  into  the 
state  treasury,  under  a  judgment  order  from  court  to  do 

so.' 

Tax  collectors,  who,  after  a  reasonable  time,  unreason- 
ably refuse  to  pay  over  the  money  collected,  must  pay 
interest^  from  the  time  it  was  demanded  of  them.''  They 
are  also  chargeal)le  with  interest  if  they  have  converted  or 
used  the  money.^*'  This  is  not  true,  however,  where  a  col- 
lector, who  bid  off  the  privilege  of  collecting  the  taxes  of  a 
town,  which  had  voted  to  collect  interest  on  taxes  that  were 


'40  Mich.  3G7  (1879). 

2  5  Denio  (N.  Y.)  401  (1848)  ;  G7N.  Y.  87  (187G)  ;  3  Yeatcs  (Pa.)  102 
(1800). 

3  3  Yeatcs  (Pa.)  102  (1800). 

*  5  Dcnio  (N.  Y.)  401  (1848). 

s  105  111.  oGO  (1883)  ;  G  N.  II.  450  (1833)  ;  9  Johns.  (X.  Y.)  71  (1812)  ; 
4  Wend.  (N.  Y.^  G75  (1830)  ;  3  Binu.  (Pa.)  123  (1810). 

"GBinn.  (Pa.)  2GG  (1814). 

73  La.  Ann.  353  (1818). 

«  Coxc  (N.  J.)  190  (1793). 

93  Spauld.  (Mc.)  177  (1882);  13  Gray  (Mass.)  321  (1859);  G  N.  II. 
45G  (1833).     1  Call  (Va.)  194  (1797)  says  not  till  jud,i2;mcnt. 

10  6  N.  II.  45G  (1833)  ;  9  Johns.  (N.  Y.)  71  (1812)  ;  3  Cow.  (N.  Y.) 
393  (1824)  ;  10  Wend.  (N,  Y.)  9G  (1833). 


INTEREST   ALLOWED    AS    DAMAGES.  67 

unpaid  at  a  certain  date,  from  and  after  that  time,  pays  over 
the  whole  amount  of  the  taxes  at  the  date  named,  from 
which  interest  was  to  run,  and  he  afterward  collects  inter- 
est on  those  that  were  unpaid.  In  such  a  case,  the  collect- 
or and  not  the  town  is  entitled  to  the  interest.^ 

A  collector  is  liable  for  interest  on  taxes,  if  they  bear 
interest,  even  if  illegally  collected. - 

A  collector,  when  sued  on  his  bond,  is  liable  for  inter- 
est from  the  time  the  taxes  should  have  been  paid  over, 
whether  he  or  his  deputy  duly  collected  them  or  not.^ 

/Sheriffs,  who  receive  interest  on  money  collected  on 
execution,  are  obliged  to  pay  it  over,  as  they  are  not 
allowed  to  make  a  profit  on  the  money  in  their  hands. « 
Where  one  took  an  interest-bearing  note,  running:  to  him- 
self,  and  approved  by  the  attaching  creditor,  it  was  held 
that  the  sheriff  had  no  rii^ht  to  retain  for  his  own  use  the 
interest  money  that  accrued  on  the  note.  He  must  hold 
the  interest  as  a  part  of  the  proceeds  of  the  sale.^  But 
the  New  Hampshire  court  holds  that  sheriffs  are  not  obliged 
to  return  interest  that  they  receive  on  sales  made  on  credit 
before  the  return  day  of  the  execution.^ 

A  sheriff  is  not  chargeable  with  interest  before  a  demand, 
unless  he  has  received  it ;  ^  and  a  rule  of  court  for  him  to 
pay  the  money  into  court,  and  a  delay  for  several  years 
after  that  is  not  a  demand.^  The  court  in  Georgia,  how- 
ever, holds  that  a  sheriff  must  pay  over  money  collected 

»  14GMass.  476  (1888). 
''25  W.  Va.  266  (1884). 
=*  36  Tex.  323  (1872). 

*  52  N.  H.  9  (1872)  ;  38  Vt.  68  (1865). 

*  4  Red.  (Me.)  56  (1852)  ;  21  N.  H.  146  (1850). 

6  30N.  H.  427  (1855). 

7  13  Johns.  (N.  Y.)  255  (1816)  ;  4  Wend.  (N.  Y.)  675  (1830)  ;  2  Bail. 
(S.  C.)  51  (1880)  ;  42  Vt.  325  (1869). 

821  Pa.  St.  291  (1853). 


68  THE    LAW    OF    INTEREST. 

within  a  reusonablc  tinio,^  and  the  Delaware  conrt,  that  he 
must  pay  interest  from  the  time  the  money  is  payable. - 

In  a  case  where  a  sheriff  sold  land  on  execution,  the 
l)urchascr  entered,  and  took  the  rents  and  profits.  He  gave 
the  sheriff  a  bond  for  the  purchase-money,  conditioned  to 
pav  on  a  day  certain,  "  or  according  to  order  of  the  court." 
The  creditor  ajzreed  that  the  money  should  be  considered  as 
in  court,  and  it  was  decided  that  the  shcrilf  was  not  charge- 
able with  interest  from  the  date  of  the  l)ond  to  the  linal 
decree  of  court. ^ 

"Where  sheriffs  retain  money,  left  in  their  hands  during 
the  pendency  of  an  action  to  determine  conflicting  claims 
thereto,  in  disobedience  to  an  order  of  court  directing  a 
deposit  of  the  money  in  court,  they  may  be  charged  with 
interest  thereon.* 

In  an  action  against  a  sheriff,  for  the  escape  of  a  prisoner 
committed  on  execution,  the  rule  of  damages  is  the  amount 
of  the  execution  and  costs,  with  interest  from  the  time  of 
the  escape.^  The  Massachusetts  court  holds  that  he  is 
liable  for  interest  in  such  a  case  only  from  demand.'' 

A  constable,  who  is  negligent  in  serving  an  execution,  is 
liable  to  pay  interest  on  the  amount  of  it." 

Treasurers.  If  a  treasurer  neglects  to  pay  over  money 
when  he  is  bound  to  do  so,  whether  to  his  successor  or 
other  party,  he  is  chargeable  with  interest  from  that  time.^ 


'  34  Ga.  173  (1865). 
■2  3  Ilarr.  (Del.)  25  (1839). 
=»4  Watts  (Pa.)  59  (1835). 
*  73N.  Y.  G22  (1878). 
*3  Conn.  423  (1820). 
«  14  rick.  (Mass.)  523  (1833). 

^  1  Ilalst.  (N.  J.)  211  (1822) ;  4  Ilalst.  (N.  J.)  205  (1827). 
8  73  Ala.  148  (1882)  ;  14  Vr.   (N.  J.)  125  (1881)  ;  15  Vr.  (N.  J.)  371 
(1882)  ;  21  Pa.  St.  385  (1853). 


INTEREST   ALLOWED   AS    DAMAGES.  69 

If  he  defaults,  he,  or  his  sureties,  must  pay  interest  from 
the  time  of  defalcation.^ 

(n)  Partners.  Where  partners  agree  to  invest  equal 
amounts  of  money  in  the  business,  and  one  puts  in  a  larger 
sum  than  the  other  he  is  entitled  to  interest  on  one-half 
of  the  excess  of  his  share  so  advanced  by  him  from  the 
time  of  its  appropriation  to  the  use  of  the  firm.^  If  one 
partner  does  not  pay  in  his  share  he  must  pay  interest 
thereon  f  but  the  other  partner  cannot  recover  interest  on 
his  share  that  he  has  paid  in,  while  the  other  was  negli- 
gent.* 

Where  one  partner  furnishes  the  capital  and  the  other 
his  skill  and  labor,  no  interest  should  be  allowed  on  the 
capital  ;^  but  if  the  business  tinally  ceases  to  be  carried  on, 
and  there  is  a  loss,  it  is  proper  in  ascertaining  the  liabil- 
ity of  the  partner  not  furnishing  money,  but  liable  for  a 
loss,  to  charge  interest  on  his  share  from  the  termination 
of  the  business.^ 

Where  each  member  of  a  firm  gives  notice  to  a  debtor 
not  to  pay  the  other  member,  it  is  held  that  such  notice 
does  not  relieve  the  defendant  from  liability  for  interest 
on  the  debt.^ 

Wilhdrcncing  funds.  In  general,  where  articles  of 
co-partnership  permit  the  partners  to  withdraw  certain 
sums  annually,  without  containing  any  stipulation  in  re- 


1  17  Cal.  504  (1861)  ;  102  111.  540  (1882).  The  court  iu  G3  Tex.  428 
(1885)  held  that  interest  should  begin  at  the  first  of  the  year  succeed- 
ing the  default. 

-  17  Ala.  32  (1849)  ;  contra,  20  Ala.  747  (1852). 

3  42  Kas.  247  (1889)  ;  1  La.  Ann.  138  (1846) .  In  the  latter  case,  it  was 
allowed  "from  judicial  demand." 

"  11  Rich.  Eq.  (S.  C.)  135  (1859). 

*  11  Hun  (N.  Y.)  509  (1877). 

6  19  Hun  (N.  Y.)  130  (1879). 

7  51  Pa.  St.  36  (1865). 


70  THE    LAW    OF    INTEREST. 

gartl  to  interest  thereon,  interest  will  not  be  allowed. ^  If 
11  partner  lias  overclrawn  the  funds,  he  will  be  chargeable 
with  interest;-  and  if  he  has  used  the  money  and  refuses 
to  disclose  the  profits  he  has  made,  when  called  upon  to 
account,  he  will  be  compelled  to  pay  compound  interest 
as  a  substitute  for  the  profits  he  might  reasonably  l)c  sup- 
posed to  have  made.'  If  a  partner  has  made  a  wrongful 
collection  and  detention,  he  must  pay  interest  from  the 
time  of  the  collection.* 

Advances.  A  partner  who  advances  money  to  his  firm 
is  not  entitled  to  interest  upon  it,^  unless  an  intent  to  allow 
it  can  be  inferred  from  usage  or  from  circumstances,  or 
unless  it  is  understood  by  the  partners  that  it  is  to  be 
allowed."  Where  it  is  allowed,  and  it  is  not  cxi)ressly  or 
impliedly  stopped  running  it  will  continue  to  accrue  until 
the  final  settlement.^ 

Dissolution.  A  partner,  who,  on  the  dissolution  of  the 
firm,  by  death,  or  otherwise,  holds  the  assets  and  property 
of  the  partnership,  and  is  entrusted  with  the  duty  of  wind- 
ing up  its  aflfairs,  is  chargeable  with  interest,  as  between 
himself  and  his  co-partner,   or  his  co-partner's  personal 


'  1  Idaho  513  (1873)  ;  11  Pick.  (:\IassO  H  (1831). 

-  133  Mass.  552  (1882)  ;  1  Johns.  Ch.  (N.  Y.)  467  (1815)  ;  2  Johns.  Ch. 
(N.  y.)  209  (1816);  contra,  G  Jur.,  N.  S.  (Eiig.)  GOO  (1860);  Johns. 
(Eng.)  653  (1860);  29  L.  J.  Ch.  (Eng.)  418  (18G0);  8  W.  11.  (Eng.) 
204.  In  the  case  of  Harris  v.  Carter,  cited  147  Mass.  313  (1888),  the 
court  Mould  not  allow  interest  on  funds  cverdraAvn  because  the  part- 
ners hnd  overdrawn  them  about  equally,  and  there  "was  no  agreement 
to  pay  interest. 

3  1  Johns.  Ch.  (N.  Y.)  467  (1815)  ;  2  Johns.  Ch.  (N.  Y.)  209  (1816). 

*30Kas.  1  (1883). 

*  39  Cal.  655  (1870)  ;  72  Ga.  154  (1883)  ;  75  111.  190  (1874)  ;  contra,  56 
Cal.  446  (1880)  ;  3  Gilm.  (lU.)  626  (1816)  ;  3  Bush  (Ky.)  519  (1868)  ; 
129  Mass.  517  (1880). 

fi  43  Mich.  171  (1880)  ;  1  McCart.  (N.  J.)  44  (1861). 

7  1  McCart.  (N.J.)  44  (1861). 


INTEREST   ALLOWED   AS    DAMAGES.  71 

representatives,  if  he  mingles  the  money  with  his  own,  or 
neglects  unreasonably  to  settle  his  account,^  on  the  other 
partner's  share  of  the  balance, ^  from  the  time  the  balance 
is  struck,  if  it  is  clone  within  a  reasonable  time.^  The 
partner  against  whom  the  balance  is  found  must  pay  in- 
terest thereon.*  If  the  surviving  partner  continues  the 
business,  using  all  the  property,  he  must  pay  interest  from 
the  time  of  dissolution.^ 

Where  an  executor  and  his  testator  were  partners  prior 
to  the  hitter's  death,  and  the  former,  without  separating 
the  testator's  portion  of  the  firm  property,  as  he  should 
have  done,  continues  to  employ  the  same  in  the  business, 
he  is  chargeable  with  compound  interest  upon  the  value 
of  the  testator's  share. ^ 

Accounting.  As  a  general  rule,  interest  is  not  allowed 
upon  partnership  accounts  until  after  a  balance  is  struck 
on  a  settlement  between  the  partners,  unless  they  have 
otherwise  agreed  or  acted  in  their  partnership  concerns/ 
But  interest  is  not  allowed  on  balances  struck  annually,  if 
they  remain  partnership  assets.^  Several  courts  hold, 
however,  that  in  some  cases  interest  should  be  allowed, 
and  that  there  should  be  no  strict  rule,  as  it  might  work 
injustice. ** 

If  a  partner  agrees  to  render  an  account  on  a  certain 
day,  and  make  settlement,  but  on  the  day  appointed  refuses 

'  128  111.  209  (1889)  ;  5  Dana  (Ky.)  438  (1838)  ;  124  Mass.  305  (1878)  ;  4 
Dall.  (Pa.)  286  (1803). 

«  21  W.  K.  (Eng.)  86;  70  Md.  465  (1889). 

3  89  Ky.  628  (1889) ;  17  Pick.  (Mass.)  519  (1836).  4  Ired.  Eq.  (N.  C.) 
223  (1846)  says  from  dissolution. 

*  2  Johns.  Ch.  (N.  Y.;  209  (1816)  ;  3  Bradf.  (N.  Y.)  99  (1854). 

*  50  Mich.  401  (1883)  ;  56  Mich.  276  (1885). 
6  68N.Y.  610(1877). 

">  44  Wis.  646  (1878). 

8  52  N.  W.  Rep.  (Iowa)  341  (1892). 

8  2  Stew.  (N.  J.)  345  (1878)  ;  64  Pa.  St.  73  (1869). 


72  THE    LAW   OF   INTEREST. 

and  withhokls  tlic  l)0()ks,  the  court  in  Illinois  makes  him 
chargeable  ^vitli  interest  on  the  l)ahince  found  against  him 
from  that  time.^ 

The  payment  on  a  partnership  debt  l)y  the  surviving 
partner  caimot  bo  applied  to  a  higher  rate  of  interest 
airiced  upon  between  the  survivor  and  creditor. ^ 

Where  a  master,  in  stating  an  account  between  partnei's, 
adopted  the  mercantile  usage  of  an  interest  account,  it 
was  allowed  to  stand,  there  being  evidence  that  the  parties 
had  followed  that  usage. ^ 

(o)  Beceivers.  A  receiver  who  violates  his  trust  l)y 
mixing  the  trust-fund  with  bis  own,"*  or  -with  other  trust 
money,  or  deposits  it  in  a  bank  to  his  private  account,^ 
or  uses  it  for  his  own  purposes,  or  loans  it  on  his  own 
account,  should  be  charged  with  interest.^ 

{p)  Stakeholders.  The  general  rule  is,  that  where  a 
man  holds  money,  which  he  is  bound  to  produce  at  a  mo- 
ment's notice,  he  is  not  expected  to  invest  it,  and  is  not 
liable  to  pay  interest  even  if  he  makes  it,"  until  demand.^ 
This  rule  applies  to  common  stakeholders,''  and  to  auc- 
tioneers.^°  So,  where  an  insurance  company  was  restrained 
from  paying  over  money  it  Avas  owing  to  one  of  the  parties 
of  the  suit,  it  was  held  that  the  company  was  acting  as  a 


>81  111.  110  (I87G). 

2  17  S.  C.  106  (1881). 

3  2  Johns.  Ch.  (N.  Y.)  209  (1816). 
Ml  Paige  (N.  Y.)  520  (1845). 

s  100  U.  S.  153  (1879). 

Ml  Paige  (N.  Y.)  520  (1845). 

7  22  Conn.  386  (1853).  lie  -will  be  liable  if  houses  the  moneJ^  1 
Dana(Ky.)  398(1833). 

«  13  Barb.  (N.  Y.)  556  (1852)  ;  20  N.  Y.  (6  Smith)  9  (1859)  ;  -4  Tenu. 
252  (1817). 

9  22  Conn.  386  (1853)  ;  2  Bradw.  (111.)  30  (1878)  ;  G  J.  J.  Mar.  (Ky.) 
581  (1831). 

»M  B.  &  Ad.  (Eng.)  577  (1830) ;  22  Conn.  386  (1853). 


INTEREST   ALLOWED   AS    DAMAGES.  73 

stakeholder,  and  therefore  was  not  liable  to  pay  interest 
iil^on  the  money  while  it  was  thus  retained.^ 

(q)  /Stockholders.  Stockholders  are  generally  liable 
only  to  the  amount  of  their  stock,  and  interest  is  not  to  be 
allowed  thereon.'"^  It  is  not  error,  however,  in  a  suit  to 
enforce  the  liability  of  a  stockholder,  to  include  in  the 
judgment  rendered  interest  from  the  date  of  bringing  the 
suit,  although  the  amount  of  recovery  might  thus  exceed 
the  original  liability.^  So,  interest  may  also  be  allowed 
on  calls  for  assessments  on  stock  subscribed,  after  default.* 

Interest  runs  against  stockholders  of  a  dissolved  corpora- 
tion from  the  filing  of  a  bill  against  them.^ 

The  agreement  of  a  railroad  corporation  to  pay  stock- 
holders interest  on  the  amount  of  stock  paid  in  prior  to 
the  time  the  road  begins  operations  is  not  legal. ^ 

Preferred  stock  bears  interest  from  its  date,  and  not 
from  its  delivery  simply.^ 

(r)  /Sureties  and  guarantors.  A  surety  on  a  bond 
becomes  liable  upon  a  breach  thereof  by  the  principal,  and, 
although  he  cannot  be  charged  with  any  interest  that  ac- 
crued before  the  breach,  that  is,  beyond  the  amount  of  the 
face  of  the  bond,  yet  the  amount  due  at  the  time  of  the 
breach  will  bear  interest  even  though  the  full  amount  of 
the  bond  is  awarded  as  damnges.^ 

The  courts  are  divided  in  their  opinion  as  to  when  in- 
terest against  the  surety  should  begin  to  run.      Some  say 

1  15  W.  R.  (Eng.)  371;  131  Mass.  294  (1881). 
M  Lud.  (Me.)  40  (1857). 
344  0.  St.  318  (188G). 
«GSInd.  388  (1879). 
*  92  Ala.  388  (1890). 

«8  Gray  (Mass.)  433  (1857),  (ultra  vires?). 
'28  S.  C.  134  (1887). 

8  1  Root  (Conn.)  423  (1792)  ;  9  Mon.  12G  (1889)  ;  3  Cow.  (N.  Y.)  151 
(1824)  ;  5  Cow.  (N.  Y.)  424  (1820)  ;  18  N.  Y.  (4  Smith)  35  (1858). 


74  THE    LAW    OF    INTEREST. 

IVom  demand  on  Ihc  principal  ;^  others,  from  demand  on 
the  surety  ;-  others,  from  the  time  of  the  surety's  default  ;^ 
and  still  others  say  that  on  an  executor's  bond,  the  lial)il- 
ity  begins  at  the  time  when  the  executor's  last  account 
^^as  settled  in  court.*  In  replevin,  it  is  generally  allowed 
from  the  date  of  the  judgment  against  the  principal.'^ 

A  <>-uarantor  is  not  generally  liable  for  interest  as  dam- 
ao'es  accruing  after  breach.^ 

Discharge.  If  the  principal  makes  a  binding  contract  to 
delay  the  payment  of  a  note  having  a  surety  without  the 
knowledge  and  consent  of  the  surety ,^as  to  pay  in  advance 
interest  for  a  longer  time  than  the  instrument  runs,  or, 
after  it  has  become  due,  with  the  understanding  that  the 
tmie  for  payment  shall  l)e  extended,  it  will  discharge  the 
surety;^  but  in  order  to  have  this  clfect  the  agreement 
must  be  binding  npon  the  holder.''  A  mere  promise  by 
the  maker  will  not  be  binding  on  any  one.^*^  Therefore,  an 
airreement  to  pay  usurious  interest,  or  the  payment  of 
such  interest  in  advance,  as  a  consideration  for  extension 
of  time  of  payment  will  not  discharge  the  surety. ^^  If  the 
surctv  ao^rees,  or  performs  acts  that  show  his  assent,  to  a 


'  3  Spauld.  (Me.)  384  (1882)  ;  1  Mass.  308  (1805)  ;  0  Mon.  12G  (1889)  ; 
2  Rich.  (S.C.)  Oa  (1845). 

2  10  Mass.  371  (1813). 

3  18  N.  Y.  (4  Smith)  35  (1858)  ;  51  Barb.  (N.  Y.)  40  (18G8) 
*  2  Col.  578  (1875)  ;  124  N.  Y.  1  (18D1). 

M  McC.  (S.C.)  28  (1821). 

M3N.Y.  244(1871);  Rice  (S.  C.)  21  (1838)  ;  10  Rich.  (S.  C)  323 
(1857)  ;  contra,  124  Pa.  St.  58  (1889). 

■>  59  Miss.  39  (1881)  ;  10  N.  II.  1G2  (1839)  ;  110  N.  C.  311   (1892). 

«  22  Kas.  3G3  (1879)  ;  10  N.  II.  1G2  (1839)  ;  15  N.  II.  119  (1844)  ;  23 
S.  C.  588  (1885). 

»57Mo.  357  (1874). 

'MON.  n.  102(1839). 

"57  Mo.  399,  503  (1874);  50  N.  W.  Rep.  (Iowa)  CG  (1891).  See 
Sureties  in  chapter  ten. 


INTEREST   ALLOWED   AS   DAMAGES.  75 

postponement  of  the  time  of  payment,  he  will  remain 
liable.  1 

Recovery.  A  snrety  is  entitled  to  receive  from  his 
principal  the  amount  he  has  been  compelled  to  pay  (in- 
cluding interest)  and  interest  thereon^  at  the  legal  rate^ 
from  the  time  he  paid  out  the  money.* 

If  one  of  several  joint  sureties  has  been  compelled 
to  pay  the  amount  due,  he  can  recover  of  the  other  sure- 
ties their  proportionate  shares  of  the  amount  and  interest 
thereon^ at  the  legal  rate,  even  though  the  contract  bore 
another  rate. 

(s)  Trustees.  Formerly,  in  England,  trustees  were 
regarded  as  gratuitous  bailees,  and  there  was  required  of 
them  a  corresponding  degree  of  care  ;  but  now  they  are 
well  paid  for  their  services,  especially  in  the  United  States, 
and  their  responsibility  has  proportionately  increased. 
But  ajjainst  honest  and  faithfid  trustees  interest  is  never 
charged  beyond  actual  receipts.' 

Trustees  are  not  liable  to  pay  interest  on  money  that  has 
gained  no  interest  unless  they  have  been  negligent  ;^  but 
if  they  might  have  made  the  funds  productive,  and  were 
grossly  negligent  in  letting  them  lie  idle,  or  have  used 
them,^  or  made  interest  they  are  liable  for  interest.^*'  They 
will  not  be  responsible  for  more  than  legal  interest,  even 


1  ION.  H.  318(1839). 

2  IG  Tex.  229  (185G). 

3  82  Mo.  6G0  (1884)  ;  29  Mo.  App.  G49  (1888), 

«2L.,  M.  &P.  (Eng.)  107(1851);  15  Jur.  (Eng.)  8G  (1851);  20  L.  J. 
Q.  B.  (Eng.)  242  (1851)  ;  74  Cal.  409  (1887)  ;  29  Mo.  App.  G49  (1888). 
*  5  Strob.  (S.  C.)  15  (1850). 
«  77  Wis.  435  (1890). 

7  89Teun.  G3  (1890). 

8  17N.  H.  458  (1845). 

9  78  Va.  24  (1883). 

>°  1  Dev.  Eq.  (N.  C.)  520  (1830). 


76  THE    LAW    OF    INTEREST. 

if  they  niiizht  have  obtained  a  larger  rate,^  unless  Ihcy 
have  received  more. 

If  trustees  have  mingled  the  trust  funds  with  their  own 
to  a  large  amount  and  for  a  long  period,  they  are  chargea- 
ble with  interest,  although  they  have  made  none.- 

If  they  deny  the  trust,  and  claim  in  hostility  thereto, 
they  are  chargeable  with  interest  from  the  time  of  their 
receipt  of  the  money,  not  l)eing  allowed  to  invoke  the 
rule  permitting  trustees  to  have  six  months  for  the  invest- 
ment of  the  funds. ^ 

These  rules  concerning  trustees  are  well  settled  in  the 
civil  law  of  Rome,  and  in  the  common  law  of  the  United 
States,  England,  and  most  of  the  continental  nations  of 
Europe.'*  "This  historical  fact,"  says  Chancellor  Kent, 
''is  calculated  to  ins})irc  ns  with  much  respect  for  these 
principles,  indei)endent  of  their  practical  utility  in  secur- 
ing the  diligence  and  tidelity  of  trustees." 

Investments.  If  trustees  have  kept  money  an  unreason- 
able length  of  time  before  investing  it  they  must  pay  in- 
terest out  of  their  own  pockets,^  as  the  funds  arc  then 
presumed  to  have  been  used  for  profit.  They  must  make 
the  funds  productive.^ 

If  the  testator  directs  the  investment  of  even  a  small 
sum,  trustees  must  invest  it,  or  pay  interest.^ 

If  trustees  invest  a  small  trust  fund  with  their  own  money 

'  2  B.  Mon.  (Ky.)  2G1  (1842). 

2  128  Mass.  377  (1880)  ;  35  N.  Y.  185  (18G6)  ;  92  Pa.  St.  407  (1880). 

='58  N.  y.  204  (1874). 

•»  1  Johns.  Ch.  (N.  Y.)  620  (1815). 

*  1  Ball  &  B.  (Ire.)  385  (1810);  40  Coim.  4G4  (1873);  130  Mass. 
CO  (1883);  50  Barb.  (N.  Y.)  453  (1807);  89  Tenn.  C3  (1890);  37 
Tex.  305  (1872);  3  Call  (Va.)  538  (1790);  78  Va.  24  (1883).  In  the 
Texas  case,  the  retention  of  six  hundred  dollars  for  two  years  was 
deemed  unreasonable. 

«5  Dana  (Ky.)   132  (1837). 

7  38  I'a.   St.  4GG  (18G1). 


INTEREST   ALLOWED    AS   DAMAGES.  77 

on  loan  at  a  certain  rate  per  cent,  they  are  not  chargeable 
with  a  greater  rate  if  it  appears  that  the  rate  was  common, 
and  all  that  conkl  be  safely  had  in  the   neighborhood.^ 

Compound  interest.  Compound  interest  is  not  allowed 
in  favor  of  trustees. ^  Interest  against  trustees  is  largely 
in  the  discretion  of  the  court,  which  may  compound  it,  at 
the  hjohest  rate.^ 

If  trustees  convert  the  funds  to  their  own  use,  and  they 
will  render  no  account  of  them,  nor  divulge  the  amount  of 
the  profits  they  have  made,  or  so  mingle  them  with  their 
own  money  that  they  cannot  ascertain  the  profits  they  have 
made,  they  will  be  charged  with  compound  interest.* 

If  trustees  use  the  funds  in  their  own  business,^  or  are 
guilty  of  such  gross  delinquency  as  to  constitute  an  inten- 
tional violation  of  duty,^  they  will  be  charged  with  inter- 
est properly  compounded  with  rests. ^ 

Profits.  All  profits  that  the  trustees  receive  from  the 
funds  in  their  hands  belong  to  the  estate,  and  not  to  them- 
selves.^ They  must  make  no  profit  beyond  a  reasonable 
compensation  for  their  services.^  If  they  have  received 
compound  interest,  or  usurious  interest,  they  must  account 
for  it.^*^  If  they  make  use  of  the  money  in  their  business, 
and  receive  income  from  it,  the  cestui  que  trust  can  elect 

»50  Pa.  St.  189  (1865). 

2  5  Johns.  Ch.  (N.  Y.)  497  (1821). 

3 72  Mich.  456  (1888). 

*  48  Conn.  207  (1880)  ;  58  N.  H.  566  (1879)  ;  1  Johns.  Ch.  (N.  Y.)  620 
(1815);  5  Johns.  Ch.  (N.Y.)  497  (at  page  517)  (1821). 

5  82Ky.  573  (1885). 

«  4  Barb.  (N.  Y.)  626  (1848)  ;  2  Dev.   &  Bat.  Eq.  (N.  C.)  325  (1839). 

^82Ky.  573  (1885),  biennial  rests  being  allowed ;  50  Barb.  (N.  Y.) 
453  (18G7)  ;  2  Dev.  &  Bat.  Eq.  (N.  C.)  325  (1839). 

s  2  Dev.  &  Bat.  Eq.  (N.  C.)  325  (1839). 

«2  Vern.  (Eng.),  548  (1706)  ;  40  Conn.  464  (1873);  2  Bland's  Ch. 
(Md.)  324  (1803)  ;  27  Md.  51  (1867). 

'016  How.  (U.  S.)535  (1853). 


78  THE    LAW    OF    INTEREST. 

Avhothcr  he  will  receive  the  legal  rate  of  interest  or  the 
profits  that  have  been  raade  by  the  trustees.^ 

Dishursements  should  be  made  first  from  the  interest 
that  has  been  received,  and  not  from  the  principal. - 

Advances.  Trustees  are  allowed  interest  on  advances 
made  by  them  on  account  of  the  estate  in  cases  of  emer- 
gency.^ 

Accounts.  Trustees  should  account  for  interest  annu- 
ally.* Merc  negligence  Avill  justify  rests  in  accounts  ;  as 
well  as  a  corrupt  intent,  or  gross  delinquency.^ 

Simple  interest  is  to  be  allowed  generally  on  the  annual 
balances,*^  annual  rests  being  made.^ 

When  trustees  refuse  to  account  the  court  will  adopt 
the  most  rigid  rule  for  calculating  interest,  compounding 
it.^  And  the  rule  that  generally  prevails  exempting  trus- 
tees from  liability  for  interest  until  the  end  of  the  year  is 
not  absolute." 

If  items  that  should  have  been  charged  in  a  trustees' 
account  are  not  thus  charged,  the  court  will  order  them  to 
be  treated  as  far  as  interest  is  concerned  as  though  they 
had  been  reckoned  in  when  they  ought  to  have  been.^° 

Distribution.  After  an  order  of  distribution,  trustees 
must  pay  the  funds  over  to  the  parties  entitled,  or  into  the 
court ;  if  they  do  not,  they  will   be  charged  with  interest, 

'2  Ves.  (Eng.)  630  (1795)  ;  2  Myl.  &  K.  (Eng.)  655  (1834)  ;  3  L.  J., 
N.S.,Ch.  (Eng.)  200  (1834);  52  Tex.  84  (1879). 

2  117  Mass.  41  (1875). 

3  117  Mass.  41  (1875)  ;  6  Halst.  (N.  J.)  44  (1829)  ;  1  Binn.  (Pa.)  488 
(1808). 

*  17  Fla.  593  (1880)  ;  2B.  Mon.  (Ky.)  2G1  (1842). 

*  50  Barb.  (N.  Y.)  453  (1867) ;  contra,  18  Ga.  8  (1855). 
6  2  McC.  Ch.  (S.  C.)  317  (1827)  ;  8  S.  C.  347  (1876). 
755  Tcnn.  417   (1874). 

«2  McC.  Ch  (S.  C.)  214  (1827). 
8  10  Rich.  Eq.  (S.  C.)  356  (1858). 
1°  109  Mass.  541  (1872). 


INTEREST   ALLOWED   AS   DAMAGES.  79 

in  the  discretion  of  the  jury,^  or  the  court  should  allow  it 
from  and  after  demand. ^  So  interest  will  be  allowed  gen- 
erally on  the  balance  in  the  trustees'  hands  that  they  should 
have  paid  over,  it  being  presumed  that  the  funds  were  used.^ 
Interest  will  also  be  allowed  against  a  trustee  if  distribu- 
tion is  delayed  by  his  groundless  exceptions  alone.* 

Practice.  The  question  of  laches  is  a  question  of  fact 
for  the  jury.^ 

Interest  will  be  decreed  against  a  trustee,  even  though 
it  is  not  prayed  for,  if  the  facts  disclosed  show  that  equit- 
able mterest  should  be  decreed.*^ 


II.       RELATING    TO  SUBJECT  MATTER. 

The  leading  classes  of  cases  as  they  relate  to  subject 
matter  are  as  follows,  viz.  : — 

(a)  Running  accounts.  A  running  account  is  one  that 
consists  of  items  on  the  part  of  the  creditor  only,  or  with 
both  debit  and  credit  items.''  Parties  can,  of  course,  agree 
on  the  manner  in  which  interest  shall  be  charged  and  cred- 
ited in  accounts  ;^  but  if  there  is  no  agreement,  and  the 
account  is  unliquidated,  that  is,  if  no  balance  has  been 
agreed  upon,  running  accounts  do  not  generally  bear  in- 
terest.^   The  mere  fact  that  an  account  is  unliquidated  is 

1  2  Gill  (Md.)  439  (1845). 

2  2  Dall.  (Pa.)  182  (1792). 

3  3B.  Mon.  (Ky.)  153  (1842). 

4  45  Pa.  St.  394  (1863). 

5  37  Tex.  305  (1872). 
M6  Md.  446(1860). 

7  G  Johns.  (N.  Y.)  45  (1810) ;  2  Wend.  (N.  Y.)  501  (1829). 

8  2  Paige  (N.  Y.)  207  (1830)  ;  1  Dall.  (Pa.)  315  (1788)  ;  2  Wash.  T. 
228  (1884). 

9  1 H.  Bl.  (Eng.)  303  (1789)  ;  9  Price  (Eug.)  134  (1821)  ;  2  Port.  (Ala.) 
451  (1835)  ;  20  Ark.  410  (1859)  ;  46  Conn.  586  (1879)  ;  2  Blf.  (Ind.)  312 
(1830)  ;  17  Kas.  18  (1876) ;  1  Bibb  (Ky.)  443  (1809) ;  2  Rob.  (La.)  360 


80  THE    LAW    OF   INTEREST. 

often,  though  not  always  a  decisive  objection  to  the  allow- 
ance of  interest,  and  the  objection  is  much  stronger  when 
no  sum  has  been  named  by  either  party  as  the  amount  to 
be  charged  until  after  a  controversy  has  arisen.^  If  there 
is  a  usage  of  merchants  to  charge  interest  on  a  running 
account,  it  is  valid,-  if  it  is  known  to  the  debtor  at  the  time 
the  dealings  occurred  ;^  but  knowledge  of  the  usage  is  not 
presumed.*  Where  the  creditor  reckoned  a  running  ac- 
count, charging  interest  on  both  sides,  and  rendered  it 
to  the  debtor,  who  made  no  objection  within  a  reason- 
al)le  time,  interest  was  allowed  accordingly.'  But 
the  simple  rendering  of  an  account  does  not  liquidate  it 
if  the  acts  of  the  parties  show  that  they  do  not  consider 
it  settled. <=  If  an  account  has  once  been  stated  and  agreed 
to  between  the  parties,  such  settlement  is  conclusive,  and 
neither  can  open  it  for  the  purpose  of  charging  interest  on 

(1812) ;  2  Cush.  (Mass.)  475  (1848) ;  Coxe  (N.J.)  17G  (1793)  ;  G  Johns. 
(N.  Y.)  45  (1810) ;  3  Johns.  Ch.  (N.  Y.)  587  (1818)  ;  4  CoAV.  (N.  Y.) 
490  (1825)  ;  5  Cow.  (N.  Y.)  587  (1825)  ;  G  Cow.  (N.  Y.)  193  (182G)  ;  2 
Wend.  (N.  Y.)  501  (1829) ;  4  Barb.  (N.  Y.)  36  (1848) ,  7  Lans.  (N.  Y.) 
381  (1873)  ;  4  IrecL  Eq.  (N.  C)  223  (1846)  ;  2  Ore.  321  (18GS)  ;  1  Dall. 
(Pa.)  265,  313  (1788)  ;  3  Kich.  (S.  C.)  376,  380  (1832)  ;  2  IliU  (S.  C.) 
4G8  (1834);  1  Eice  (S.  C.)  21  (1837);  1  Spears  (S.  C.)  209  (1843);  1 
Tex.  102  (1846)  ;  5  Vt.  177  (1832)  ;  2  Wash.  T.  228  (1884)  ;  contra,  18 
S.  C.  1  (1882).  From  verdict  only,  says  2  Bay  (S.  C.)  233  (1799).  In 
Tennessee,  interest  is  allowed  on  separate  items  from  maturity.  18 
Tenn.  458  (1837). 

>  46  Conn.  586  (1879). 

*4  Ired.  Eq.  (N.  C)  223  (1846).  Evidence  to  prove  a  custom  of 
merchants  in  a  city  of  another  state  allowing  them  to  charge  interest 
on  accounts  is  not  admissible  when  the  courts  of  that  state  refuse  to 
recognize  the  custom.    2  Blf.  (Ind.)  312  (1830). 

■■'  1  Barb.  (N.  Y.)  235  (1847)  ;  3  N.  Y.  (3  Comst.)  502  (1850). 

^  iBarb.  (N.  Y.)  235  (1847). 

53  Cal.  231  (1853);  74  Cal.  CO  (1887).  In  the  latter  case,  it  was 
charged  from  thirty  days  after  the  date  of  each  item. 

8  G^Johns.  (X.  Y.)  45  (1810)  ;  2  Wend.  (N.  Y.)  501  (1829)  ;  4  Ired.  Eq. 
(N.  C.)  223  (1846). 


INTEREST    ALLOWED    AS    DAMAGES.  81 

either  side,  either  at  law  or  equity.^  The  Iowa  court  de- 
cides, however,  that,  if  it  is  discovered  that  the  account 
has  been  reckoned  with  short  rests,  the  settlement  will  bo 
reopened  and  only  simple  interest  allowed.^ 

Courts  state  the  principle  in  these  two  ways  :  that  interest 
must  be  allowed  on  the  balance  of  a  running  account  from 
the  time  when  it  ought  to  have  been  paid  f  or,  from  the 
time  when  the  defendant  had  notice  of  the  deficiency  on 
his  part.* 

The  foregoing  rules  only  apply,  however,  to  those  cases 
where  there  is  no  stipulated  period  of  credit,  and  where 
the  balance  may  vary  from  time  to  time.^  If  there  is  at 
the  time  of  the  dealings  a  general  practice  of  the  creditor 
of  charging  interest  to  his  customers,  after  a  limited  period 
of  credit,  those  who  deal  with  him  with  knowledge  of  the 
fact  are  bound  to  pay  it  f  but  knowledge  of  the  practice 
is  not  presumed.'^  So  if  a  certain  time  is  fixed  for  pay- 
ment, interest  is  allowed  from  that  time.^ 

Some  courts  hold  that  though  no  stipuhited  term  of 
credit  appears,  it  is  to  be  presumed  that  tlie  parties  con- 
tracted in  view  of  a  reasonable  time  of  credit  and  there- 
fore the  law  infers  that  a  reasonable  time  was  allowed  for 
the  payment  of  the  account,  and  they  leave  the  facts  in 
each  case  to  determine  the  question.'* 

'  61  Cal.  401  (1882). 

232  Iowa  187  (1871). 

3  12  Fla.  640  (1869)  ;  86  Ky.  668  (1888)  ;  5  Vt.  177  (1832). 

*  12  Johns.  (N.  Y.)  156  (1815)  ;  3  Cow.  (N.  Y.)  393  (1824). 

'"  8  Vt.  258  (1836). 

6  4  Wend.  (N.  Y.)  483  (1830)  ;  8  Wend.  (N.  Y.)  109  (1831). 

'  IBarb.  (N.  Y.)  235  (1847). 

»  6  Binn.  (Pa.)  159  (1813).  Contra,  unless  expressly  or  impliedly 
promised.     3  Brev.  (S.  C.)  506  (1814). 

933  Ala.,  N.  S.  459  (1859);  22  Pick.  (Mass.)  291  (1839);  2  Pen. 
(N.  J.)  548  (1809)  ;  2  Vt.  536  (1830)  ;  40  Vt.  251  (1867).  Tn  the  last- 
named  case,  the  court  says  that  it  has  not  followed  the  English  or  New 
6 


82  THE    LAW    OF    INTEREST. 

It  is  cfcncr.illy  held  that  parties  should  settle  tlioir  mu- 
tual and  running  accounts  at  least  once  a  year,  and  on  that 
basis  the  courts  allow  interest  on  the  balance  from  such 
time  as  the  settlement  should  have  l)een  made  between  the 
parties  whether  it  was  made  or  not.^  Such  annual  rests 
are  allowed  in  merchants'  accounts,- but  not  on  ordinary 
imlifjuidated  accounts,^  and  in  settlement  of  mortgage 
debts  when  rents  have  been  received  by  the  mortgagee.* 
If  the  interest  is  to  be  paid  semi-annually,  the  rests  should 
be  semi-annual.^  Some  courts  hold  that  the  time  for  draw- 
ing annual  balances  is  January  first  of  each  year.^  Such 
annual  rests  are  not  allowed  after  mutual  dealings  have 
ceased,^  except  under  a  specific  agreement.®  This  rule  of 
rests  is  not  only  valid  and  sanctioned  by  the  law,  but  com- 
putation by  them  is  even  directed  by  the  courts  f  m  the 
Massachusetts  courts,  however,  to  be  so  treated, ^°  it  must 
be  an  open  and  mutual  account  current.     The  Alabama 

York  practice.  The  court,  in  the  case  cited  23  Vt.  TOG  (1851),  says  that 
it  ■would  not  assume  that  by  the  universal  custom  in  Vermont  six  months 
is  the  longest  period  of  ordinary  credit,  as  understood  betAveen  mer- 
chants and  their  customers,  and  that  it  is  the  custom  to  charge  inter- 
est from  and  after  that  time,  or  semi-annually. 

'  33  Ala.,  N.  S.  459  (1859)  ;  38  Vt.  492  (18GG)  ;  48  Vt.  52  (1875)  ;  60 
Vt.  473  (1887). 

2  3  AVash.  (U.  S.,  C.  C.)  350  (1818) ;  13G  Mass.  GO  (1883) ;  2  Johns. 
Ch.  (N.  Y.)  209  (181G).  Pennsylvania  allows  it  only  with  the  assent 
of  the  customer.  10  S.  &  E.  (Pa.)  257  (1823)  ;  IG  S.  &  K.  (Pa.)  257 
(1827). 

3  4  Cow.  (N.  Y.)  49G  (1825)  ;  2  McC.  Ch.  (S.  C.)  200  (1827). 

*  110  Mass.  273  (1872). 

*  5  Pick.  (Mass.)  146  (1827). 
«58  Vt.  576  (1886). 

7  3  Wash.  (U.  S.,  C.  C.)  396  (1818). 

8  11  Met.  (Mass.)  210  (184G). 

»  11  Ves.  jr.  (Eng.)  92  (1805)  ;  13  Eng.  L.  &  Eq.  (Eng.)  140  (1852) ; 
16  How.  (U.  S.)  535  (1853)  ;  18  Pick.  (Mass.)  1  (1836) ;  1  Johns.  Ch. 
(N.  Y.)  G20  (1815). 

'0  10  Pick.  (Mass.)  398  (1830)  ;  124  Mass.  242  (1878). 


INTEREST   ALLOWED    AS   DAMAGES.  83 

court  is  strongly  opposed  to  this  rule,  contending  that  such 
rests  are  not  allowed  by  law,  and  that  no  custom  or  agree- 
ment to  that  effect  can  alter  the  law.^  In  that  state,  the 
court  holds  that  the  account  is  closed  at  the  date  of  the 
last  item,  and  that  the  balance  draws  interest  from 
that  time.^ 

In  the  case  of  annual  rests,  the  Vermont  court  holds 
that  a  demand  at  the  end  of  each  year  is  not  necessary.^ 
Other  courts  aflSrm  that  it  is,  and  that  such  balances  Avill 
bear  interest  only  after  a  demand.* 

Interest  is  not  chargeable  on  book  debts,^  except  by  vir- 
tue of  special  custom,  usage^  or  agreement,^  unless  they 
are  due  at  the  end  of  each  year,^  when  the  presentation  of 
a  bill  or  demand  of  payment  is  not  necessary.^  The  cus- 
tom of  charging  interest  must  be  sanctioned  by  the  pur- 
chaser.^"  In  absence  of  proof  of  such  an  agreement  or 
custom  interest  is  not  allowed,"  except  for  items  of  cash 
advanced, ^^  unless  a  bill  is  rendered  or  demand  is  made.^^ 

There  is  no  objection  to  charging  interest  on  both  sides 
of  an  account.^* 

'  2  Port.  (Ala.)  351  (1835). 

2  4G  Ala.  053  (1871).     See  26  Atl.  Kep.  (Vt.)  67  (1892). 
■5  30  Vt.  285  (1858);  36  Vt.  46  (1863)  ;  60  Vt.  473  (1887). 
*4Dall.  (U.  S.)  286(1803);  2  Cush.  (Mass.)  475  (1848);  26N.  H.  85 
(1852). 
n  Dick.  (Eng.)  305  (1757)  ;  32  Conu.  482  (1865). 
M  Dall.  (Pa.)  315  (1788). 

732  Conn.  482  (1865)  ;  6  Johns.  (N.  Y.)  45  (1810)  ;  2  Wend.  (N.  Y.) 
501  (1829). 

»68  Ga.  831  (1882). 
»88  Vt.  492  (1866). 
i»  1  Speer  (S.  C.)  249  (1843). 
"32  Conn.  482  (1865). 

•2  0  CuiiU'S  (N.  Y.)  226  (1805);  2  Wend.  (N.  Y.)  413  (1829);  Riley 
(S.  C.)  215  (1837). 

'HG  Conn.  586  (1879) ;  62  Ind.  359  (1878)  ;  demand  must  be  made  or 
suit  begun,  8  Fla.  161  (1858);  3  Kob.   (La.)  270  (1842);,  71  Mo.  495 
(1880);  76  Mo.  68  (1882). 
"3  Cal.  231  (1853). 


84  Till-:    L.VW    OF    INTEREST. 

Interest  may  he  charged  on  an  aceonnt  ^  -when  the  settle- 
ment of  it  has  l)een  long  delayed .'-  The  conrt  in  Nel)raska 
holds  that  nnsettled  aceonnts  bear  interest  after  six  months 
iVoni  the  last  item,^  hi  Pennsylvania,  there  is  a  binding 
custom  to  charge  interest  on  book  accounts  for  goods  sold 
and  delivered,  from  the  end  of  six  months  after  delivery.* 

The  general  rule  of  casting  interest  in  partial  payments 
is  not  ai)plicable  to  a  running  account. •'' 

In  ]\Jississip})i,  the  jury  may  allow  interest  on  open 
accounts,^ l)ut  it  is  not  absolutely  due."  In  Pennsylvania, 
interest  on  running  accounts  is  "within  the  allowance  of 
the  jury  onh",  in  their  discretion.^ 

Interest  upon  items  of  which  the  debtor  was  ignorant 
throngh  the  creditor's  fault  is  not  allowed  ;^  as  Avhere 
parties  settled  from  time  to  time,  and  an  item  had  been 
overlooked  by  both  parties  when  they  settled.  Upon  such 
an  item  no  interest  is  allowed,  if  a  suit  is  afterward  brought 
to  recover  it.^'^ 

It  is  not  proper  to  add  the  interest  to  the  principal  each 
year,  and  thus  obtain  interest  upon  interest,  unless  the 
piuties  have  so  agreed  ;^^  and  a  custom  of  a  creditor,  known 
and  acquiesced  in  by  a  debtor,  to  charge  interest  on  accounts 
alter  the  end  of  each  year,  is  evidence  of  an  agreement  to 

'  r,:]  Iiitl.  31  (1878). 

-7.-.  Iiul.  307  (1881). 

3  15  Neb.  326  (1883)  ;  30  Neb.  G13  (1890). 

*30  Pa.  St.  3-tG  (1858). 

*8  Fla.  2U  (1858). 

«1  Cu-^li.  (Miss.)  308  (1852). 

MValk.  (Miss.)  20  (1818);  2  Geo.  (Miss.)  51  (185G) ;  4  Geo.  (Miss.) 
539  (1857). 

»10S.  &n.  (Pa.)  257  (1823). 

•3  Wins.  (29  Vt.)  15-t  (1857)  ;  30  Vt.  285  (1858). 

*^3  Wins.  (29  Vt.)  loi  (1857). 

"3  II.  .&  M.  (Va.)  89  (1808);  31  Vt.  G79  (1859);  contra,  1  Bald. 
(U.  S.,  C.  C.)  53G  (1832). 


INTEREST   ALLOWED    AS    DAMAGES.  85 

pay  interest.^  The  Vermont  supreme  court  said,  "no  cus- 
tom of  merchants,  however  uniform  or  long  standing,  will 
justify  a  court,  in  Vermont,  in  allowing  a  party  to  cast 
interest  upon  interest  on  a  running  account."^  It  is,  how- 
ever, allowed  in  Enijland  under  a  custom  of  forwardinii: 
accounts,  quarterly,  half  yearly,  or  yearly  to  the  debtor, 
who  acquiesces  in  them  by  his  silence.^ 

(5)  Account  stated.  The  mere  act  of  striking  the  bal- 
ance of  an  account  between  two  parties  does  not  entitle  the 
party  in  whose  favor  the  balance  is,  to  interest  from  that 
time,  unless  the  money  is  to  be  then  paid,*  or  a  demand  is 
then  or  afterward  made.^  It  carries  interest  from  the  time 
it  is  stated;^  and  in  England  the  jury  may  give  interest 
from  that  day  in  their  discretion.^  If  the  account  has  been 
rendered  and  acquiesced  in,  interest  will  be  allowed  from 
that  time  ;^  and  it  must  be  of  the  whole  account  between 
the  parties.^  The  latter  statement  is  true  of  all  accounts 
if  they  would  bear  interest  on  settlement. ^°  Another  rule 
is  that  interest  is  chargeable  from  the  time  the  debtor  has 
notice  of  the  deficit  in  the  account  at  accounting  ;^^  and  so 

'  S  Iowa  1G3,  182  (1859)  ;  so  on  bank  accounts,  9  Iowa  313  (1859). 

"^  13  Vt.  430  (1841)  ;  58  Vt.  576  (1886). 

3  2  Ves.  (Eng.)  15  (1792);  2  Anst.  (Eng.)  496  (1795);  3  Campb. 
(Eng.)  467  (1813);  1  Starkie  (Eng.)  487  (1816);  5  B.  &  Aid.  (Eng.) 
34  (1821). 

"6  Esp.  (Eng.)  45  (1806);  2  Carapb.  (Eng.)  429  (1810);  contra,  2 
Red.  (Me.)  256  (1850). 

^  3  Cainpb.  (Eng.)  468,  472  (1813)  ;  42  111.  225  (1866)  ;  22  Pick.  (Mass.) 
291  (1839). 

»  67  Mich.  277  (1887)  ;  1  Hayw.  (N.  C.)  104  (1794)  ;  1  Desau.  (S  C.) 
537  (1797). 

'  2  W.  Bl.  (Eng.)  761  (1771)  ;  3  Wils.  (Eng.)  205  (1771). 

8  8  Fla.  214  (1858);  Diul.  (Ga.)  218  (1832);  26  III.  54  (1861);  48 
111.  198  (1868)  ;  69  111.  624  (1873)  ;  14  Bradw.  (111.)  593  (1883)  ;  3  Rob. 
(La.)  361  (1842)  ;  contra,  1  Ball  &  B.  (Ire.)  428  (1810). 

*  40  Iowa  117  (1874). 
>"  18  Mich.  25  (1869). 

"  12  Johns.  (N.  Y.)  156  (1815). 


8Q  THE    LAW    OF    INTEREST. 

if  no  notice  is  had,  if  the  defendant  is  to  blame  for  not  re- 
ceiving notice.^ 

The  balance  of  a  stated  account  is  principal  whether  it 
inclndes  prior  interest  or  not.- 

Intcrest  is  allowed  where  it  has  been  customary  between 
the  i)arties  to  allow  it  in  similar  cases. ^ 

An  account  stated  by  one  administrator  is  l)inding  upon 
all  ;*  and  an  executor's  account  is  a  stated  account  if  all 
parties  agree  to  it.^ 

An  account  stated  cannot  be  re-opened  to  discover  what 
is  in  it  ;^and  so  the  rate  of  interest  charged  therein  cannot 
be  changed,  unless  mistake  is  shown. ^ 

(c)  Advancemenis.  "What  shall  be  included  in  advance- 
ments made  l)y  a  parent  to  a  child  while  l)oth  are  living  is 
not  always  clear.  Much  depends  on  circumstances.  Arti- 
cles of  use  are  generally  included,  and  not  articles  of 
luxury.^  They  are  usually  given  for  the  support  of  a 
child  who  goes  away  from  home,  and  who  thus  receives  the 
benefit  of  his  share,  while  the  other  children  enjoy  their 
shares  by  residence  with  the  parent.^  So  advancements 
do  not  bear  interest,^*'  even  though  the  child  gives  notes 
]>earing  interest  to  evidence  the  fact  that  he  leceived  the 
money. ^^  In  Tennessee,  interest  is  computed  on  advance- 

'  20  N.  Y.  4G3  (1859). 

2  1  Baklw.  (U.  S.,  C.  C.)  53G  (1832)  ;  88  Cal.  384  (1891)  ;  70  Pa.  St. 
183  (1871). 

a  1  Campb.  (Eng.)  50  (1807). 

'  1  Ilayw.  (N.  C.)  10-4  (1794). 

*  7  Yerg.  (Teim.)  172  (1834). 

«  70  Pa.  St.  183  (1871). 

'  70  Ga.  200  (1886). 

"2  McC.  Ch.  (S.  C.)  90  (1827). 

'Bail.  Eq.  (S.  C.)  154  (1830). 

>»35  Ala.  293  (1859);  17  Mass.  356  (1821);  3  Pick.  (Mass.)  450 
(1820);  135  Mass.  71  (1883);  Sax.  (N.J.)  685(1832);  1  Stock.  (N.J.) 
572  (18.53)  ;  128  Pa.  St.  209  (1889). 
"  3.-  Ala.  293  (1859)  ;  3  Pick.  (xMass.)  450  (1826). 


INTEREST   ALLOWED    AS   DAMAGES.  87 

meiits  from  the  time  of  the  ancestor's  death  ;^  but  the  court 
in  South  Carolina  holds  to  the  contrary. ^  Generally,  ad- 
vancements will  carry  interest  from  the  time  the  property 
is  ready  for  distribution,^  the  time  being,  as  a  general  rule,- 
one  year  after  the  ancestor's  decease.*  Advancements 
made  to  distributees  when  their  shares  are  due  are  not 
technically  advancements,  and  do  not  bear  interest.^ 

For  a  statement  of  the  law  of  interest  on  advancements 
made  by  administrators,  agents,  assignees,  executors  and 
trustees,  see  those  subjects.^ 

(d)  Alimony.  Interest  is  allowed  on  alimony.^  Where 
a  decree  for  a  sum  of  money  in  lieu  of  alimony  was  made, 
and,  if  not  paid,  execution  was  to  issue  twenty  days  from 
date  of  the  decree,  it  was  held  that  interest  ran  from  the 
end  of  the  twenty  days  and  not  from  the  date  of  the  de- 
cree.^ 

(e)  Annuities.  Annuities  begin  at  the  death  of  the 
testator,  if  no  other  time  is  mentioned  in  the  will,  and 
consequently  the  first  payment  is  due  one  year  from 
the  testator's  decease,  from  which  time,  if  it  is  not  then 
paid,  interest  upon  it  will  begin. ^  It  makes  no  diflerence 
whether  it  is  interest  or  principal,  either  will  bear  interest 
after  a  year. 

'85  Tenu.  124,430  (1886). 

2 Bail.  Eq.  (S.  C.)  154  (1830). 

ns  Ga.  177  (1855);  32  Ga.  530  (18G1)  ;  1  Jones  Eq.  (N.  C.)  253 
(1854). 

"128  Pa.  St.  269  (1889). 

^52  Miss.  291  (1876)  ;  42  Hun  (N.  Y.)  592  (1886). 

^Administrators,  page  33 ;  agents,  page  40;  assignees,  page  44;  ex- 
ecntors,  p:ige  47;  and  trustees,  page  75. 

M9  Kas.  159  (1877). 

«2  Smiih  (Me.)  428  (1873). 

93  Atk.  Cii.  (Eiig.)  579  (1747);  7  Ves.  (Eng.)  89  (1802);  4  Harr. 
(Del.)  330  (1815);  6  Mass.  37  (1809);  128  Mass.  575  (1880);  5  Binn. 
(Pa.)  472  (1813);  3  W.  &  S.  (Pa.)  437  (1842);  9  W.  &  S.  (P:i.)  530 
(1840);  Bail.  Eq.  (S.  C.)  274  (1831);  contra,  1  Dick.  (Eng.)  178 
(1743),  278  (1755),  305  (1757). 


88  THE    LAW    OF    INTEREST. 

The  Delav\-are  court  holds  that  the  question  of  allowing 
interest  upon  arrears  of  an  annuity  is,  in  a  court  of  equity, 
discretionary  with  the  court,  depending  ui)on  equital)le 
considerations  arisins:  out  of  the  circumstances  of  each 
particular  casc.^ 

There  is  no  certain  rule  ;  the  most  frequent  instances 
where  it  is  allowed  beiuir  "svhere  interest  is  necessarv  for 
maintenance.^ 

]f  an  aimuity  is  bequeathed  by  a  man  to  his  wife  in  lieu 
of  claims  on  his  estate,  interest  is  allowable  on  it  if  it  is  in 
arrears.^     So,  if  it  is  given  in  lieu  of  dower.* 

{J)  Betterments.  Interest  is  allowed  on  betterments 
from  the  time  of  the  acceptance  of  the  report  of  referees 
at  nisi  pr ins,  when  exceptions  are  taken  to  the  acceptance 
of  the  report,''  as  for  a  verdict. 

{g)  Bills  and  notef?.  Bills  and  notes  do  not  carry  in- 
terest as  damages,  it  is  obvious,  until  after  maturity,  and 
they  are  payable,^  but  they  do  then,  even  though  there  is 
an  agreement  not  to  sue  till  later. ^  To  draw  interest  be- 
fore  that  time  there  must  be  an  express  agreement  there- 
for. In  England,  if  there  is  no  agreement  to  pay  interest 
on  a  note,  its  allowance  is  in  the  discretion  of  the  jury.® 

Demand.  No  demand  is  necessary  to  enal)le  a  holder 
to  collect  interest  on  a  note  payable  at  a  day  certain  from 
and  after  that  day.°  If  the  note  or  bill  is  payable  on  de- 
mand, it  "svill  not  begin  to  carry  interest  as  damages  until 


•1  Dtl.  Ch.  3G8  (1831). 
-2  Atk.  (Eng.)  211  (1741). 
3  -1  Dcsau.  (S.  C.)  422  (1814). 

*  1  Ilurr.  (Del.)  106  (1832). 

*  G  Hub.  (Me.)  337  (18G3). 

«5  Ve.s.  (Eng.)  801  (1801);  Coop.   (Eug.)  29  (1805);   3  Dev.  &  B. 
(N.  C.)  70  (1838). 
^3  N.  C.  70  (1838);  5  Humph.  (Tenn.)  405  (1844). 
M7  L.  T.,  N.  S.  (Eng.)  325. 
9  2  Sinilh  (Me.)  54  (1873). 


INTEREST   ALLOWED   AS   DAMAGES.  89 

an  actual  demand  has  been  made/  as  it  is  not  payable  until 
Ihen,  unless  a  contract  or  usage  requires  it;-  service  of 
the  writ,  in  an  action  to  recover  the  principal  of  the  note, 
l)eing  such  a  demand.^  So,  interest  on  an  "I.  O.  U." 
does  not  begin  to  run  until  a  demand.* 

Instalment  notes.  When  by  the  terms  of  a  promissory 
note  it  is  payable  by  instalments,  and  on  the  faihn-e  to 
pay  any  instalment  all  the  subsequent  ones  shall  become 
due  immediately,  interest  begins  to  run  on  the  whole 
amount  of  the  note  from  the  tirst  default.^ 

{Ii)  Bonds  and  recognizances.  The  general  rule  is 
that  the  penalty  of  a  bond  limits  the  amount  that  can  be 
recovered  f  so,  on  a  bail  recognizance  ;'  but  interest  as 
damages  may  carry  it  beyond  that  amount.®  If  the  whole 
amount  is  due  upon  it  at  the  time  of  the  breach  of  the 
condition  of  the  bond,  interest  as  damages  begins  to  run 
against  the  principal  and  sureties^  for  detaining  the  del)t 
from  the  time  of  the  breach,  the  amount^"  of  the  bond  being 
regarded  as  liquidated  damages. ^^     It  is  a  question  of  law 

'G  Mod.  (Eng.)  138  (1705);  18  Ala.  300  (1850);  54  Ala.  71  (1875); 
SBradvv.  (111.)  C9  (1880);  Add.  (Pa.)  137  (1793);  1  MeC.  (S.  C.)  370 
(1821).  In  Louisiaua,  interest  ou  bills  is  due  only  from  judicial  de- 
mand, at  common  law.     8  Rob.  (La  )  207  (1841). 

'^  15  Pick.  (Mass.)  500  (1834). 

ns  Ala.  300  (1850)  ;  15  Pick.. (Mass.)  500  (1834). 

*  151  Mass.  115  (1890). 
'     MEsp.   (Eug.)  147  (1802). 

«  1  Salk.  (Eug.)  151  (1707)  ;  5  CoAV.  (N.  Y.)  424  (182G). 

73II0US.  (Del.)  49  (18G4). 

8  Show.  (Eng.)  15  (1G98) ;  1  C.  E.  Gr.  (N.  J.)  59  (18G3)  ;  13  Grat. 
(Va.)  354  (1856). 

9  12  Allen  (Mass.)  243  (18GG)  ;  10  Leigh   (Va.)  284  (1839). 

1°  Even  if  it  is  for  the  payment  of  a  less  sum.  7  T.  11.  (Eug  )  124 
(1797). 

'1  R.  &  M.  (Eng.)  105  (1824)  ;  1  Paine  (U.  S.,  C.  C.)  GGl  (1824)  ;  4 
Day  (Conn.)  30  (1809)  ;  10  Conn.  95  (1831)  ;  2G  Conn.  42  (1857) ;  11.  M. 
Charl.  (Ga.)  42  (1819) ;  34  Kas.  43  (1885)  ;  2  G.  &  J.  (Md.)  251  (1830)  ; 
12  Allen  (Mass.)  243  (18GG)  ;  8  N.  H.  491  (1837)  ;  3  Cal.  (N.  Y.)  49  (1805)  ; 
15  Wend.  (N.  Y.)  7G  (18.35) ;  18  N.  Y.  (4  Smith)  35  ri858)  ;  1  Wiitts 
(Pa.)  3G5  (1833)  ;  1  McC.  Ch.  (S.  C)  100  (1825). 


90  Till':    LAW    OF    INTEUEST. 

ami  not  one  for  the  jiny.^  Interest  is,  however,  also  rc- 
C'ovcr.ihlo  l)03()n(l  tlie  penalty  in  EnglnncP  on  a  ]nmd  con- 
ditioned to  acconnt  for  moneys  to  ))e  received  ;^and  where 
the  plaintitl'  is  kei)t  out  of  his  money  by  writs  of  error  ;*  or, 
itdelayed  by  injunction  ;''or,  if  the  recovery  is  delayed  by 
the  ohliii'or.^  But  these  exceptions  are  not  allowed  in  the 
adnuiiistration  of  the  debtor's  assets  Avhere  his  other  cred- 
itors might  be  injtu-ed  by  allowing  the  bond  to  be  rated 
beyond  the  penalty.'' 

Ajijjeal  bond.  A  party  is  entitled  to  interest  in  an  action 
on  an  appeal  bond  as  well  as  though  he  proceeded  on  the 
judgment.^ 

J3aU  bond.  No  interest  can  be  recovered  on  al)ail  bond 
conditioned  for  the  appearance  of  a  person  to  answer  to  an 
indictment  for  forgery.^ 

Replevin  bond.  In  New  Jersey,  the  court  allows  inter- 
est on  a  replevin  bond  from  the  date  of  the  judgment  for 
the  return  of  the  goods. ^"^  In  South  Carolina,  the  court 
holds  that  interest  is  not  recoverable  on  a  replevin  bond  ;^^ 
but  in  Maryland  it  is  held  that  the  question  should  be  left 
to,  the  discretion  of  the  jury. ^^ 

Back  interest.  A  bond,  conditioned  to  pay  certain  bills 
and  interest  on  them  from  date  if  not  paid   on  a  certain 


>  3  Cai.  (X.  Y.)  49  (1805). 

^   1  Dick.  (Eng.)  408  (17C9),  514  (1775);  2  Vcs.  jr.  (Eng.)  301 
(1793)  ;  G  Vcs.  (Eng.)  411  (1801). 
^  2  T.  R.  (Eng.)  388  (1788). 
*  2  Burr.  (Eng.)  1094  (1760). 
'  1  Vcrn.  (Eng.)  349  (1G85). 
«  1  Vcrn.  (Eng.)  349  (1C85) ;  C  Vcs.  (Eng.)  73  (1801). 

7  6  Vcs.  (Eng.)  329  (1800). 

8  8  Wheat.  (U.  S.)  G91  (1823)  ;  9Mon.  120  (1889). 
»127U.  S.  212  (1887). 

'"  1  Zab.  (N.  J.)  411  (1848)  ;  3  Zab.  (N.  J.)  73G  (1852)  ;  8  Vr.  (N.  J.) 
179  (1874). 
"2  Bay  (S.  C.)  408  (1802). 
«2G.&  J.  (Md.)  430  (1830). 


INTEREST    ALLOWED    AS    DAMAGES.  91 

day,  only  carries  interest  from  the  time  the  bills  l)ecamc 
due  or  were  payable.^  So,  a  judgment  on  l)onds  made 
payable  at  a  day  subsequent  to  their  date,  with  interest 
from  a  prior  da}",  "if  not  punctually  paid,"  was  enjoined 
as  to  the  back  interest,^  because  it  was  secured  by  a  pen- 
alty. 

From  ivJiat  time  alloived.  If  a  penal  bond  is  payable 
on  demand,  it  carries  interest  only  from  demand,  or  date 
of  the  writ.^  There  are  many  rules  relative  to  the  time 
when  interest  on  a  bond  begins  to  run,  but  the  best  one 
perhaps  is  that  which  fixes  the  obligor's  liability  for  inter- 
est when  he  is  bound  to  pay  the  principal.*  In  New  York, 
it  is  held  that,  on  a  bond  conditioned  to  pay  over  a  certain 
sum  of  money,  interest  not  being  mentioned,  nor  time  of 
payment,  or  that  it  is  payable  on  demand,  interest  is 
chargeable  from  date.^  Other  rules  are  as  follows  :  inter- 
est is  allowed  on  a  school  commissioner's  bond  for  failure 
to  collect,  on  the  amount  claimed,  from  the  time  when  by 
reasonable  diligence  he  could  have  realized  the  money. ^ 
On  a  bond  to  pay  a  debt  merely,  a  surety  is  not  bound  to 
pay  interest  until  he  has  been  in  default  himself.'^  On  a 
penal  bond  to  pay  a  definite  sum  if  possession  of  certain 
land  was  recovered,  interest  was  allowed  from  the  time 
possession  of  the  land  was  taken,  and  not  from  the  time  of 
the  judgment  merel3^^  A  jail  bond  carries  interest  from 
the  date  of  the  judgment.^     So,  in  a  suit  against  a  surety 

UH.  Bl.  (Eng.)  227  (1789), 

2  Gilm.  (Va.)  172  (1820). 

3  Minor  (Ala.)  417  (182G)  ;  82  Ga.  33  (1888)  ;  2  Mo.  App.  123  (1870). 
*  McM.  Eq.  (S.  C.)  103  (1841). 

"  1  Duer  (N.  Y.)  369  (1852)  ;  11  N.  Y.  (1  Keru.)  40G  (1854). 
«  1  Gilm.  (111.)  347  (1844). 
'  GLa.  Ann.  51  (1851). 
«  4  Dana  (Ky.)  176  (1836). 
»2  Vt.  517  (1830). 


92  THE    LAW    OF    INTEREST. 

on  :i  l»;iil  boiulj^and  on  a  recognizance  ;-  in  the  latter  from 
the  time  ofthe  Ibrieiture.^  In  asniton  an  administration 
bond,  interest  is  aHowcd  from  the  time  tliat  the  judge  of 
probate  passes  his  decree  fixing  liability.* 

{{)  Bottomrij.  "When  the  risk  is  ended  simple  inter- 
est begins  to  run  ij)sojure  Avithout  any  demand.  Interest 
on  the  marine  interest  or  premium  is  not  allosved  by  the 
civil  law,  but  under  the  common  law  that  rule  is  not  of  un- 
iversal application, — the  law  and  practice  in  France,  how- 
ever, being  in  favor  of  it.  The  better  opinion  is,  that  the 
maritime  premium,  as  well  as  the  sum  lent,  becomes  due, 
the  whole  forming  one  aggregate  debt,  and  that  a  delay  in 
discharging  it  ought  to  be  followed  by  the  allowance  of 
sim[)le  interest,  as  in  other  cases  of  debt.^ 

(j)  Damages.  In  England  and  in  some  parts  of  the 
United  States,  the  courts  hold  that  damages  bear  interest 
generally  from  the  time  they  are  liquidated  ;''and  they  are 
liquidated  when  it  is  certain  how  much  is  due,  and  when  it 
is  due.  Tliey  are  not  liquidated  when  one  ofthe  parties 
cannot  alone  render  it  certain  how  nnich  is  due  f  that  is,  if 
property  destroyed  has  a  definite  money  value,  suscepti- 
ble of  easy  proof,®  interest  will  be  allowed  from  time  of 
the  loss.''  The  general  American  rule,  however,  is  that 
interest  shall  be   allowed   from  the  time   the   wrong  was 

>  12  La.  Ann.  720  (1857). 

2  3  IIous.  (Del.)  49  (18G4). 

3  21  Kas.  475  (1870). 
■•  1  Mass.  G9  (1804). 

*3Mas.  (U.  S.,  C.  C.)  255  (1823);  Marsh,  on  lus.  &  Bot.,  b.  2, 
ch.   4,  p.  752. 

«  Wms.  Kep.  (Eng.)  37G,  377  (1717)  ;  21  Ark.  349  (18C0)  ;  30  Minn. 
145  (1883)  ;  G3  Mo.  99,  308,  3G7  (1S7G)  ;  Gt  Mo.  47  (187G),  542  (1877;  : 
Ten.  (N.  J.)  G52  (1810). 

7  20  Ga.  5G1  (185G). 

»  GO  Conn.  125  (1891). 

"Cllowa  G48  (1883). 


INTEKEST   ALLOWED   AS    DAMAGES.  93 

done.i  Some  courts  allow  interest  on  damages  only  from 
the  time  that  the  right  of  action  accrued,^  which,  as  a  mat- 
ter of  fact,  is  always  the  time  when  the  injury  was  done  ; 
others  from  the  date  of  the  writ  f  and  others  not  till  judg- 
ment.* Where  land  is  taken  for  railroads,^  or  highways,^ 
or  parks, ^  interest  runs  from  the  time  the  land  is  actu- 
ally taken. ^  Other  courts  than  those  holding  the  above 
opinion  diiferto  a  considerable  extent  as  to  when  interest 
should  begin.  Some  say  from  the  time  the  land  is  en- 
tered on  ;^  others,  from  time  the  award  is  made,  without 
demsuid;^"  others,  from  the  time  of  the  assessment  ;^^  and 

•  75  Ala.  113  (1883)  ;  79  Ala.  298  (1885)  ;  50  Ark.  169  (1887)  ;  9  So. 
Rep.  (Fla.)  G61  (1891)  ;  68  Ga.  818  (1882)  ;  81  Ga.  414  (1888)  ;  55  III. 
421  (1870)  ;  74  111.  83(1874);  86  111.  384  (1877);  6  Virg.  (Me.)  600 
(1870);  9  Virg.  (Me.)  290  (1872);  11  Pick.  (Mass.)  223  (1831);  64 
Miss.  604  (1887)  ;  13  Neb.  317  (1882)  ;  23  Neb.  620  (1888)  ;  25  Neb. 
146  (1888)  ;  63  Tex.  57  (1885)  ;  contra,  3  Scam.  (111.)  193  (1841)  ;  27 
Iowa  22  (1869). 

■'  11  Vr.  (N.J.)  11  (1878). 

3  26  Wis.  295  (1870). 

4  125  Pa.  St.  24  (1889)  ;  126  Pa.  St.  1  (1889)  ;  135  Pa.  St.  437  (1890)  ; 
27  Pac.  Rep.  (Utah)  693  (1891) ;  5  Leigh  (Va.)  598  (1833). 

»25  Fed.  Rep.  (U.  S.)  886  (1885)  ;  41  Iowa  52  (1875)  ;  52  Iowa  613 
(1879)  ;  61  Iowa  637  (1883)  ;  63  loAva  443  (1884)  ;  64  Iowa  753  (1884)  ; 
9  Virg.  (Me.)  290  (1872);  105  Mass.  303  (1870);  125  Mass.  544 
(1878) ;  127  Mass.  571  (1879)  ;  13  Neb.  317  (1882)  ;  28  Neb.  174  (1889)  ; 
17  Hun  (N.  y.)344  (1879). 

«  91  111.  49  (1878)  ;  93  111.  125  (1879)  ;  108  Mass.  535  (1871)  ;  116  Mass. 
165  (1874)  ;  23  Neb.  620  (1888)  ;  14  N.  H.  240  (1843).  In  the  case  last 
cited,  a  highway  was  laid  out  in  1837,  but  not  opened  till  1842.  The 
plaini  iff  made  no  claim  for  land  damages,  but  subsequently  brought 
a  suit  therefor.  He  was  allowed  interest  only  from  the  time  the  road 
was  opened,  because  "the  damages  could  not  be  considered  as  detained 
before  that  time." 

7  100  111.  75  (1881)  ;  88  Tenn.  510  (1890). 

8  34  Kas.  159  (1885)  ;  1  Stew.  (N.  J.)  450  (1877)  ;  25  Fed.  Rep.(U.  S.) 
886  (1885).     From  demand  only,  says  the  court  in  18  N.  H.  75  (1846). 

9  2  Pa.  St.  340  (1845)  ;  20  Pa.  St.  240  (1853). 
'"  131  N.  Y.  123  (1892). 

"  41  Pa.  St.  463  (1862). 


94  THE    LAW    OF    INTEREST. 

others  from  juilgmcnt  only. ^  In  tros[):iss  for  scizinp:  per- 
sonal i)n)perty,  interest  is  allowed  from  the  time  of  the 
seizure. - 

In  :in  action  of  deceit  in  the  sale  of  a  farm,  interest  is 
allowed  from  the  date  of  the  conveyance,^  if  the  mere 
dillerence  in  value  does  not  make  the  damage  good.^ 

If  a  statute  awards  special  or  stipulated  damages,  as  for 
killing  stock,  no  interest  will  bo  allowed,^  even  from  date 
of  the  writ.*^ 

On  damages  for  personal  injuries,  no  interest  will  be 
allowed  before  judgment,"  as  they  do  not  have  actual  val- 
ues.^ It  is  allowed  in  Louisiana  on  the  amount  of  dama- 
ges on  protested  bills  and  notes.''  In  Missouri,  interest 
was  not  allowed  in  an  action  for  negligence,  where  the 
defendant  could  get  no  benefit  from  his  acts.^° 

In  an  action  for  the  breach  of  a  contract,  interest  is  al- 
lowed only  from  a  demand,"  or  the  l)eginning  of  the  suit,'- 
as  the  claim  is  unlicjuidatod.  So  on  the  })reach  of  a  warranty 
of  title, ^^  the  i)laintiff  is  not  allowed  interest  till  the  time  of 
his  eviction,  provided  he  has  had  the  profits  of  the  land  in 


'  50  Wis.  78  (1880). 

2  22  111.  493  (1859). 

•'G  Virg.  (Me.)  GOO  (1870). 

M3Micli.  383,  C23   (1880). 

*  58  loAva  G25  (1882).     See  13  Ala.  708  (1848). 

6  11  Ired.  L.  (N.  C.)  490  (1850). 

^  17  S.  W.  Rep.  (Tenn.)  882  (1891)  ;  91  Tenii.  35  (1891). 

8  81  Ga.  397  (1888). 

»  2  Kob.  (La.)  117  (1842)  ;  contra,  13  La.  357  (1839). 

'»  6  Mo.  App.  594  (1879)  ;  73  Mo.  33  (1880) ;  15  Mo.  App.  577  (1884)  ; 
17  Mo.  App.  177  (1885)  ;  32  Mo.  App.  350  (1888)  ;  44  JIo.  App.  39G 
(1891). 

"  140  Mass.  517  (188G).  The  court  iii  C4  Miss.  G40  (1887)  says  from 
oreach. 

'"  5  Rob.  (La.)  192  (1843)  ;  C8  Mo.  2C8  (1878)  ;  24  Tenn.  103  (1S44). 

'■^  27  Am.  R.  13  (1877) ;  5  Rob.  (La.)  217  (1843)  ;  71  N.  Y.  118  (1877). 


INTEREST   ALLOWED   AS   DAMAGES.  95 

the  meantime.^  So  interest  should  not  be  allowed  where 
land  has  l)een  taken,  so  long  as  the  plaintift'  receives  the 
rents  and  profits  of  the  premises.^ 

Where  a  contractor  agreed  to  build  a  house  for  another, 
to  be  paid  for  thirty  days  after  it  was  finished,  and  it  was 
not  done  on  time,  the  owner  forbidding  further  work,  the 
contractor  sued  for  what  he  had  done,  and  was  allowed 
interest  from  thirty  days  after  the  time  when  he  would 
have  completed  the  house  if  he  had  continued  to  work 
upon  it.^ 

Interest  is  also  allowed  on  damages  for  the  breach  of  an 
executory  contract  to  convey  land.* 

Interest  may  be  recovered  on  the  difierence  between 
the  amount  of  the  purchase  money  at  a  resale  by  an  ad- 
ministrator and  the  amount  bid  by  the  purchaser  at  the 
first  sale  who  failed  to  comply  with  the  terms  of  the  sale.^ 

Where  goods  are  lost  by  a  carrier,  interest  will  be  al- 
lowed on  their  value  from  the  time  of  the  loss.^ 

Wliere  in  a  real  action,  judgment  is  to  ])e  entered  for  the 
demandant  for  the  value  of  the  land,  if  the  entry  of  judg- 
ment on  the  verdict  has  been  delayed  at  the  request  of 
the  tenant,  interest  will  be  added  to  the  price  so  estima- 
ted by  the  jury  from  the  time  of  finding  the  verdict,  and 
judgment  be  entered  for  the  amount  thus  ascertained,  in 
spite  of  a  statute  that  judgment  be  rendered  "for  the  sum 
so  estimated  "  by  the  jury.^ 

Interest  should  be  allowed  as  damages  on  a  sum  awarded 
to  a  defendant  on  an  injunction,  where  the  decree  is  in 

'52  Ark.  322  (1889). 
2  8  Vr.  (N.  J.)  222  (1874). 
39  Cnsh.  (Mass.)  58  (1851), 
"  11  Leigh  (Va.)  261  (1840). 
*  lOKich.  (S.  C.)  60  (1856). 
«  40  111.  249  (1866). 
^4Greenl.  (Me.)  297  (1826). 


90  Tin:  LAW  of  interest. 

his  favor,  from  the  date  of  the  Ihial  decree,  tlic  defendant 
having  appealed,  and  the  i)hiintiir  not  having  been  in  de- 
fault before.^ 

Interest  should  be  allo^ved  on  daniaircs  for  the  infringe- 
nient  of  a  })atcnt  from  the  report  of  the  master.^ 

Interest  as  a  2)a)'t  of  damages.  Whether  interest,  eo 
nomine,  is  allowable  in  ascertaining  the  damages  in  actions 
of  tort  or  not,  all  the  authorities  agree  that  the  lapse  of 
time  from  the  commission  of  the  wrong  to  the  time  of 
recovery  may  be  considered  in  determining  the  damages,'' 
whether  interest  is  claimed  or  not ;  and  whether  or  not 
the  jury  should  take  this  fact  into  their  consideration  and 
add  interest,  is  in  their  discretion.*  The  court  may  in- 
struct the  jury,  says  the  supreme  court  of  Florida,  to  allow 
interest  as  damages  from  the  destruction  of  pro^lerty  f 
but  where  i;iterest  is  given  as  damages  by  a  statute,  the 
court  will  not  allow  interest  on  such  damages.^  The  court 
has  no  right  to  add  interest  to  the  verdict  of  a  jury  in  an 
action  for  damages,^  as  it  is  presumed  that  the  jury  reck- 
oned it  in^  (it  l)eing  an  element  of  damage),  which  they 
can  do  if  they  wish.''  The  court  should  add  interest  on  the 
verdict  from  the  day  the  judgment  is  actually  rendered, 

'  3GVt.  439  (1SG3). 

^  141  U.  S.  441  (1891). 

3  68  Ga.  818  (1882)  ;  4  Zab.  (N.  J.)  47  (1853)  ;  125 Pa.  St.  24  (1889)  ; 
12G  Pa.  St.  1  (1889)  ;  135  Pa.  St.  437  (1890)  ;  5G  Vt.  401  (1883). 

*  1  M.  &  S.  (Eng.)  1G9  (1813) ;  1  Harr.  (Del.)  234  (1833),  449  (1836) ; 
11  Pick.  (Mass.)  421  (1831)  ;  141  Mass.  12G  (1886)  ;  30  Minn.  18  (1882)  ; 
96  N  y.  477  (1884);  32  N.  E.  Rep.  (N.  Y.)  44  (1892);  54  N.  AV. 
Rep.  (So.  Dak.)  601  (1893)  ;  82  Tex.   104  (1891). 

*27ria.  1  (1891). 

«  13  Ala.  708  (1848). 

7  36  Iowa  ]21  (1872). 

"  22  Iowa  49  (1867) ;  2  Spears  (S.  C.)  594  (1844).  Tlie  clerk  slioulil 
add  the  interest  wlietlier  the  jury  did  or  not,  says  91  N.  Y.  661  (1863). 

'22  Iowa  49  (18G7);  33  Iowa  422,  502  (1871);  10  Rich.  (S.  C.)  382 
(1857)  ;  2  AV.  Va.  90  (1867)  ;  contra,  104  Pa.  St.  306  (1883). 


INTEREST    ALLOWED    AS    DAMAGES.  97 

and  not  from  the  first  day  of  the  term  ;^  and  tlie  IMaine 
court  holds  that  the  jury  should  not  be  allowed  to  add 
interest  subsequently  to  the  date  of  the  writ.^  But  the 
supreme  court  of  the  United  States  says  that  the  allowance 
of  interest  in  collisions  and  other  cases  of  pure  damage 
is  in  the  discretion  of  the  court. ^ 

Costs.  The  circuit  court  of  the  United  States  is  not 
bound  to  allow  interest  on  costs  awarded  l)y  the  district 
court,  although  such  costs  are  included  in  the  decree  of 
the  circuit  court. ^ 

Compound  interest.  Where  a  contract  provided  for 
liquidated  damages,  on  a  breach  and  for, yearly  settle- 
ment, interest  on  the  damages  of  each  year,  from  the  end 
of  the  year,  should  be  allowed.^ 

Rests.  In  a  breach  of  covenant  of  warranty  of  title  in 
a  deed  of  laud,  rests  are  not  allowable  in  the  computa- 
tion of  interest  upon  the  amount  of  the  consideration 
paid  for  the  land.^ 

(h)  Debts  of  another..  The  measure  of  damages  in  an 
action  brought  upon  a  promise  to  pay  a  debt  of  another, 
brought  after  the  debt  was  due,  but  before  any  payment 
thereon,  is  the  amount  of  the  debt  and  interest.^  Where 
the  promise  is  to  pay  the  debt,  if  it  is  not  paid  on  a  day 
named,  the  promissor  is  liable  for  interest  from  the  day 
named,  without  notice  of  the  non-payment.^ 

{!)  Deposits.  Mere  depositaries  are  not  chargeable 
with  interest  on  the  deposits  in  their  hands. ^     It  is  al- 

'  27  Pac.  Eep.  (Utah)  G93  (1891)  ;  15  ^Y.  Va.  C28  (1879). 
2  4  Heath  (Me.)  287  (1855). 

^  118  U.  S.  507  (1886).  See  53  Fed.  Eep.  (Me.)  948,  952  (1891). 
"  118  U.  S.  507  (1886). 
5  86  N.  Y.  618  (1881). 
«30N.  H.  531  (1855). 
7  119  Mass.  500  (1876). 
«58Ga.  54  (1877). 
9  26  Vt.  100  (1853). 
7 


98  THE    LAW    OF    INTKKEST. 

lowed,  howcn-er,  on  purchase  money  remaining  in  tlio  pur- 
chaser's hands  to  pay  oil'  incunil)rances.  It  is  also  allowed 
on  deposits  made  hy  a  purchaser,  either  to  a  princii)al  or 
an  auctioneer,  which  he  is  entitled  to  recover,^  in  a  suit 
auainstlhe  vendor,  by  alleging  special  damage  in  the  de- 
chiration.2  jf  ^\^q  ^i,i|;  \^  against  the  auctioneer,  a  demand 
upon  him  must  be  made.^  If  the  purchaser  has  had  pos- 
session of  the  premises,  which  have  been  of  value  to  him, 
the  vendors  will  be  entitled  to  interest  upon  the  purchase 
money  as  a  remuneration  for  the  occupation.* 

Banks.  At  common  law  a  banker  is  not  liable  to  pay 
interest  upon  money  deposited,  although  at  the  time  of 
the  deposit  it  is  declared  that  interest  shall  not  be  payable 
upon  a  certain  event  which  did  not  happen.^  So  a  bank 
pa3ing  a  check  with  a  forged  indorsement  is  not  liable  to 
pay  interest  on  it.*^  A  depositor  in  a  national  bank,  when 
it  suspends  payment,  and  a  receiver  is  appointed,  is  enti- 
tled to  interest  upon  his  deposit  from  the  time  of  his  de- 
mand,'   even  though  it  be  interest  on  interest. 

{m)  Dividends.  Interest  is  not  allowed  against  cor- 
porations on  dividends;^  nor  on  profits  of  shareholders 
that  have  been  retained  a  series  of  years  f  but  it  is  allow- 
able in  an  action  for  dividends  on  preferred  stock. 


1.-  10 


1  3  Campb.  (Eng.)  258  (1812);  1  Moore  (Eiig.)  322  (1817);  7  Tann. 
(Eng.)  592  (1817);  48  N.  II.  273  (18G9);  38  Vt.  559  (1806);  contra,  5 
Taun.  (Eng.)  G25  (ISU)  ;  1  M.  &  Kob.  (Eug.)  143  (1831);  5  C  &  V. 
(Eng).  48  (1833). 

>*  1  Moore  (Eng.)  322  (1817). 

«  1  Moore  (Eng.)  481  (1817). 

M  Ala.  21  (1842). 

*  2  N.  &  M.  (  Eng.)  120  (1833)  ;  5  B.  &  Ad.  (Eng.)  282  (1833). 

8  81  Ga.  597  (1888). 

'94U.  S.  437  (187G). 

8  6  Gill  (Md.)  3G3  (1847). 

»  6  La.  745  (1834). 

><'84N.  Y.  157  (1881). 


INTEREST    ALLOWED    AS    DAMAGES.  99 

(ii)  Doiver,  etc.  A  widow  is  entitled  in  equity,  when 
dower  is  assigned  to  her,  to  an  account  for  vents  and  prof- 
its, or,  if  it  be  in  money,  to  interest  upon  it.^ 

A  widow's  statutory  interest  in  her  husband's  estate, 
wlien  she  waives  the  provisions  of  the  will,, will  not  bear 
interest  until  an  effectual  order  for  the  payment  of  it  has 
been  made.^ 

Wliere  a  wife  is  deprived  of  the  benefits  of  a  settle- 
ment, among  which  is  the  enjoyment  of  the  estate  by  her, 
if  surviving,  and  her  property  is  restored  to  her,  she  is 
entitled  to  interest  from  her  husband's  decease.^ 

(o)  Moneij  fmudulently  obtained.  Interest  is  allowed 
on  money  obtained  by  fraud  from  the  time  it  was  ob- 
tained.* So,  if  interest  has  been  paid  it  can  be  recovered.^ 

Where  a  party  receives  unimproved  lauds  in  the  set-oft' 
of  a  claim,  through  tiie  fraud-  of  the  delator,  which  con- 
tract he  afterward  rescinds,  he  can  collect  interest  from 
the  time  of  the  original  settlement,  if  he  has  had  no  rent 
or  profits  from  the  land,  and  tenders  a  reconveyance.'^ 

{p)  Incumbrances.  The  general  rule  is  that  ])articular 
tenants  or  tenants  for  life  must  pay  the  interest  on  in- 
cumbrances on  the  estate,  as  between  themselves  and  the 
remainder-men.'     And  the  incumbrancer  is   entitled  to 


1  2  Bail.  (S.  C.)  343  (1831)  ;  Eich.  Eq.  Cas.  (S.  C.)  378  (1832) ;  1  S. 
C.  119  (1SG9). 

2  101  Mass.  40  (1869). 

3  Bail.  Eq.  (S.  C;  268  (1831). 

"  1  Campb.  (Eng.)  129  (1807)  ;  2  Kelley  (Ga.)  370  (1847)  ;  3,5  Ga.  40, 
136,  193  (1866)  ;  85  Ga.  141  (1890)  ;  11  Mass.  504  (1814)  ;  118  Mass.  147 
(1875)  ;  144  Mass.  313  (1887)  ;  12  Mo.  App.  335  (1882)  ;  3  Cow.  (N.  Y.) 
393  (1824)  ;   39  Hun  (N.  Y.)  519  (1886). 

^30  Mo.  App.  10  (1888). 

«  81111.  15  (1875). 

•  4  Ves.  (Eng.)  24  (1798)  ;  89  Ala.  273  (1889)  ;  3  Bland's  Ch.  (Md.) 
245  (1831);  5  Johns.  Cli.  (N.  Y.)  482  (1821);  Bail.  Eq.  (S.  C.)  3J7 
(1831)  ;    1  Waslib.  E.  E.,  9t;,  257,  573;  Story,  Eq.  Jur.,  §487. 


.s 


100  THE    LAW    OF    INTEREST. 

tlio  arrears  of  interest  ugtiinst  reiiuundcr-mcn,  though  by 
laehes  he  omitted  to  obtain  it  from  the  tenant  for  lifc.^ 
But  the  Vermont  court  has  decided  that  there  is  no  rule 
there  requiring  a  dowress  in  an  equity  of  redemption  to 
pay  interest.^ 

Leuatees  for  life  are  bound  to  keep  down  the  interest  of 
a  debt  charged  upon  their  legacies,  and  they  may  be  com- 
pelled to  contribute  to  its  payment;  but,  they  are  not 
bound  to  surrender  all  the  profits  for  the  purpose  of  ex- 
tinguishing it.' 

((/)  Insolvency.  The  only  interest  accruing  liefore 
the  l)ankruptcy  or  insolvency  of  the  debtor  that  can  be 
proved  on  a  debt  in  insolvency  is  contractual  interest.'^ 

If  there  are  several  preferred  creditors,  and  the  asset 
are  insufficient  to  pay  the  interest  due  them  in  full,  they 
are  to  be  paid  proportionately  as  far  as  the  money  will 
go.^ 

There  is  no  objection  to  adding  interest  generally  to  all 
claims  from  date  of  failure  or  death  to  the  time  of  allow- 
ance of  the  claims,  report  of  the  commissioners  or  decree 
of  distribution.  It  is  proper  enough  to  do  it,  but  it  can 
possibly  have  no  perceptible  effect  if  the  estate  is  really 
insolvent.''  It  is  immaterial  to  the  creditors  themselves, 
provided  an  equitable  principle  be  adopted,  whether  in- 
terest stops  at  the  time  of  the  failure  or  death  of  the 
debtor,  or  at  the  time  of  the  report  of  the  commissioners, 
or  the  decree  of  distribution.^     But  the  Connecticut  rule 

>  2  MacM.  (Eng.)  457  (1816). 
=^23  Vt.  248  (1851). 
3  2Dev.  Eq.  (N.  C;  420  (1833). 

■»  Cox  Eq.  Cas.  (Eug.)  21-9  (1790)  ;  2  B.  &  A.  (Eng.)  305  (1819)  ;  18 
S.  C.87  (1882). 

5  1  Tai-e  (N.  Y.)  181  (1828). 

8  i;',  Mass.  537  (1810) ;  4  Met.  (Mass.)  317  (1842). 

'  4  Met.  (Mass.)  317  (1842). 


INTEREST    ALLOWED    AS    DAMAGES.  101 

is  not  to  allow  interest  after  tlie  average  is  struck,^  nor 
between  the  rendering  of  the  report  of  the  commissioners 
and  the  passing  of  the  decree.^ 

If  there  is  a  surplus  of  funds,  courts  may  add  interest 
to  the  claims  from  the  time  of  the  commissioners'  return 
to  the  decree  of  distribution  f  and  if  any  assets  then  re- 
main, interest  on  their  debts  under  the  ordinary  rules 
should  be  decreed  to  the  creditors.*  It  is  then  a  diflerent 
question  than  it  is  when  it  arises  between  the  creditors 
only. 

Assignment.  In  an  assignment  for  the  benefit  of  cred- 
itors, the  demands  stated  as  a  charge  on  the  funds  should 
include  interest  up  to  the  time  of  selling  the  property, 
and  realizing  the  proceeds.^ 

Interest  on  a  claim  is  not  suspended  by  the  debtor  plac- 
ing it  upon  his  schedule,  when  the  creditor  takes  no  part 
in  the  proceedings,  although  the  debtor  may  obtain  a 
respite.^ 

Where  a  debtor  assigned  his  estate  in  trust,  inter  alia, 
to  pay  to  certain  persons  the  amount  of  their  respective 
demands  in  full,  the  surplus  to  go  to  the  debtor,  and  the 
creditors  release,  they  are  entitled  to  interest  on  their  debts, 
if  the  fund  prove  sufficient.'' 

Whether  interest  is  to  be  paid  to  a  preferred  creditor 
under  an  assignment  depends  upon  the  language  used  in 
the  assignment. ^ 


'  Kirby  (Conn.)  38  (1786) ;  21  Conn.  41  (1851). 
2  21  Conn.  41  (1851). 
M  Met.  (Mass.)  317  (1842). 

■•  3  Cli.  Rep.  (Eng.)  64  (1670)  ;  3  Brown's  Cli.  (Eug.)  436  (1792)  ,  4 
Met.  (Mass.)  317  (1842)  ;  contra,  2  Wms.  Rep.  (Eng.)  27  (1722). 
'  18  Pick.  (Mass.)  360  (1836). 
^  12  La.  Ann.  833  (1857). 
7  9  S.  &R.  rPa.)  123  (1822). 
«6  W.  &  S.  (Pa.)  223  (1843). 


102  THE    LAW    OF    INTEREST. 

(r)  Judrfments.  At  common  law  formerly  judgments 
clitl  not  bear  interest  ;^  but  they  generally  do  now  ;2  even 
if  it  is  otherwise  agreed.^  Judgments  for  costs  also  draw 
interest  ;^  so  on  attorneys'  fees  stipulated  in  a  mortgage.^ 
A  judgment  on  a  bill  for  official  fees,  unless  there  has  been 
a  regular  taxation  as  against  the  debtor,  does  not  draw 
interest.*^  If  part  of  the  costs  of  a  judgment  is  expressed 
to  be  payable  in  chattels,  no  interest  will  be  allowed  there- 
on.^ Neither  will  interest  be  allowed  on  costs  when  pay- 
ment has  been  delayed  by  error  proceedings.^  Interest 
cannot  be  collected  on  a  judgment  on  a  bond  with  penalty 
to  perform  covenants,  when  the  jury  find  a  verdict  for  a 
specific  sum.^ 

A  judgment  for  use  and  occupation  does  not  draw 
interest. ^*^ 

Some  courts  do  not  allow  interest  on  the  judgment  if 


'  17  Ala.  40i  (1850)  ;  2  Cal.  99  (1852)  ;  7  Mart.,  X.  S.  (La.)  14  (1828), 
425  (1829);  4  Met.  (Mass.)  317  (1842);  Walk.  (Miss.)  214  (1826);  2 
N.  H.  1G9  (1820)  ;  6  N.  H.  567  (1834)  ;  20  N.  H.  34  (1849) ;  3  Hawks 
(N.  C.)  36  (1824)  ;  4  Dall.  (Pa.)  251  (1802)  ;  5  Binn.  (Pa.)  61  (1812) ; 
16  Pa.  St.  151  (1851);  1  McC.  (S.  C.)  328  (1821)  ;  4  McC.  (S.  C.)  212 
(1827)  ;  3  Eich.  (S.  C.)  376,  380  (1832). 

"•  3  Stew.  (Ala.)  109  (1830) ;  7  Port.  (Ala.)  110  (1838) ;  10  Ala.  867 
(1846)  ;  25  111.  95  (I860)  ;  5  Kas.  70  (1869)  ;  1  Mon.  66  (1868)  ;  2  N.  II. 
169  (1820)  ;  20  N.  II.  34  (1849)  ;  Bat.'s  Mart.  &  2cl  Ilay'd  (N.  C.)  182 
(1797) ;  4  Dall.  (Pa.)  251  (1802) ;  2  Brev.  (S.  C.)  99  (1806)  ;  2  N.  & 
McC.  (S.  C.)  395  (1820)  ;  1  McC.  (S.  C)  328  (1821)  ;  3  Rich.  (S.  C.) 
376,  380  (1832)  ;  2  Spears  (S.  C.)  573  (1844) ;  7  Leigh  (Va.)  346  (1836) : 
20  Wis.  602  (1866). 

3  6  niiin.  (Pa.)  435  (1814). 

*  26  Iiid.  123  (1890)  ;  42  O.  St.  82  (1884)  ;  2  Brcv.  (S.  C.)  99  V1806)  ; 
7  Loi-li  (Ya.)  346  (1836)  ;  contra,  95  Pa.  St.  481  (1880). 

"  11  Kas.  381  (1873). 

«  5  Dcnio  (N.  Y.)  355  (1848). 

'  2  Brev.  (S.  C.)  99  (1806). 

"31  Neb.  846  (1891). 

9  3  McC.  (S.  C.)  166  (1825). 
>"  8  Cal.  32  (1857). 


INTEREST    ALLOWED   AS   DAMAGES.  103 

the  cause  of  action  upon  which  it  is  founded  was  ex  delicto;^ 
so,  in  an  action  on  a  bond  to  recover  damages  f  and  this 
is  true  in  equity.^  Other  courts  hold  that  interest  should 
be  allowed  on  judgments  in  tort  as  well  as  for  any  other 
cause,  as  the  judgment  liquidates  the  demand  and  makes 
it  a  debt  of  a  certain  amount.*  A  judgment  on  a  claim  in 
contract  will  bear  interest,^  whether  the  contract  upon 
which  it  was  founded  did  or  not.^ 

A  judgment  against  a  garnishee  will  not  be  for  interest 
if  the  writ  does  not  claim  it.^ 

Where  a  judgment  is  recovered  on  an  open  account,  and 
the  defendant  pays  it  before  an  action  of  debt  is  commenced 
thereon,  he  is  not  liable  for  interest.^ 

Where  the  plaintiff  is  entitled  to  interest  on  the  amount 
due  him,  from  commencement  of  the  action,  he  may  in- 
clude such  interest  in  a  judgment  taken  by  default,  although 
the  damages  were  unliquidated  and  the  interest  was  not 
specifically  demanded  in  the  complaint.^ 

Where  there  has  been  no  delay  by  defendant,  and,  the 
action  being  on  a  penal  bond,  damages  have  been  assessed 
to  the  full  amount  of  the  penalty,  no  interest  is  alio  wed. ^"^ 

Interest  is  not  taxable  for  delay  on  verdicts  in  tort.^^ 

'  1  Mon.  (Ky.)  150  (1824)  ;  IJ.  J.  Mar.  (Ky.)  95  (1829)  ;  84  Ky.  462 
(1886)  ;  15  La.  Ann.  504  (1860)  ;  contra,  18  La.  Ann.  28  (18GG)  ;  15  Nev. 
133  (1880)  ;  2  Bay  (S.  C.)  193  (1798). 

2  15  La.  Ann.  504  (1860). 

3  1  Mon.  (Ky.)  150  (1824). 

"  22  Wend.  (N.  Y.)  157  (1839). 

5  3  La.  Ann.  574  (1848) ;  15  La.  Ann.  333  (1860) ;  2  Spears  (S.  C.) 
573  (1844)  ;  9  Tex.  517  (1853). 

«  1  mil  (S.  C.)  79  (1833)  ;  9  Tex.  517  (1853)  ;  contra,  3  McC.  (S.  C.) 
1C6  (1825). 

'3  Call  (Va.)  455(1803). 

8  3  Rich.  (S.  C.)  376,  380  (1832). 

8  68  Wis.  61  (1887). 
10  1  Johns.  (N.  Y.)  343  (1806). 
"  19  Wend.  (N.  Y.)  101  (1838). 


104  THE    LAW   OF    INTEREST. 

Interest  cannot  be  allowed  on  a  judgment  jjiven  for  the 
balance  of  an  account  between  the  parties,  when  payments 
have  been  made  for  costs,  and  on  other  accounts.^ 

Demand.  A  demand  of  payment  of  the  judgment  is 
not  necessary,^  and  need  not  be  alleged  or  proved.^ 

Rale.  The  contractual  rate  is  merged  in  the  judgment, 
and  from  the  date  of  the  judgment  the  rate  allowed  is  the 
legal  rate*  of  the  place  where,  and  time  when,*"  the  judg- 
ment is  sought  to  be  enforced.  There  are  some  courts, 
however,  that  hold  that  the  contract  rate  will  be  allowed 
on  the  judgment ;°  and  if  the  judgment  is  founded  on  two 
contracts  bearing  different  rates,  interest  should  l)e  given 
proportionately  for  both  rates. ^  If  a  judgment  is  for  in- 
terest only  it  bears  the  legal  rate.^ 

Validity.  The  judgment  need  not  state  how  much  of 
it  is  prnicipal  and  how  much  is  interest.^  In  Louisiana 
and  Xevada,  it  must  state  on  its  face  that  it  bears  interest.^'' 

mien  interest  begins  to  run.  Interest  on  a  jiulgment 
begins  to  run  on  the  day  when  it  is  rendered  or  entered. 

'  2  La.  512  (1831). 

29  Virg.  (Me.)  255  (1872). 

3129  Mass.  GOO  (1880). 

*32  Ark.  573  (1877)  ;  Breese  (III.)  52,  83  (1824)  ;  1  Scam.  (111.)  137 
(1834);  35  111.  152  (1864);  45  111.  178  (18G7)  ;  79  111.  532  (1875);  27 
Iowa  349  (1862)  ;  136  Mass.  344  (1884)  ;  6  Neb.  356  (1877)  ;  16  S.  C.  15, 
469  (1881)  ;  20  Tex.  465  (1857). 

5  26IIun  (N.  Y.)  546  (1882). 

65  Cal.  416  (1885)  ;  6  Cal.  155  (1856)  ;  9  Cal.  294  (1858)  ;  28  Cal.  289 
(1865);  32  Cal.  82  (1867);  14  Mo.  App.  187  (1883);  25  O.  St.  622 
(1874).  The  court  in  29  Cal.  165  (1865)  eaid  that  the  contractual  rale 
should  be  allowed  if  it  was  prayed  or  pleaded  for,  otherwise  not ;  but 
see  the  other  California  cases. 

M7  Iowa  477  (1877). 

"1  G.  Gr.  (Iowa)  66  (1847). 

"  12  Ala.  54  (1847).    It  must  state  how  much  of  it  is  principal,  says 
the  court  in  1  Nev.  613  (1865). 
>"  12  La.  Ann.  112,  116  (1857)  ;   15  Nev.  313  (1880). 


INTEREST    ALLOWED    AS    DAMAGES.  105 

A  decree  of  the  orphans'  court  against  an  administrator,  for 
the  amount  of  which  an  action  on  his  bond  is  brought, 
bears  interest  from  the  time  of  its  rendition.^  In  equity, 
on  a  master's  report,  interest  will  be  allowed  from  the  day 
up  to  which  he  computed  interest. ^  When  a  dividend  is 
declared  by  a  receiver  the  plaintiff  is  entitled  to  interest 
on  the  amount  of  his  dividend  from  the  time  it  was  de- 
clared.^ In  Louisiana,  if  a  judgment  on  a  suit  ex  conlracla 
does  not  state  when  interest  begins  to  run,  it  will  commence 
at  the  institution  of  the  suit.* 

A  verdict  bears  interest  only  from  time  of  judgment  upon 
it ;  ^  but  the  court  may  enter  a  judgment  nunc  pro  tunc, 
and  thus  make  a  verdict  bear  interest  from  its  date.^  An 
award,  and,  also,  a  master's  report,  if  confirmed,  bears 
interest  from  the  time  they  are  made  ;'  and  if  an  award 
is  subsequently  reduced  in  amount,  interest  is  only  given 
from  the  final  allowance.^  Where  a  report  on  an  order 
of  reference  must  be  confirmed  before  a  decree  can  be 
carried  into  effect,  interest  runs  from  the  date  of  its 
confirmation.^ 

If  the  plaintiff,  after  obtaining  a  verdict,  delays  the  cause 
by  moving  for  a  new  trial,  he  can  have  interest  only  to 
the  time  of  the  verdict.^"  Where  the  delay  is  caused  partly 
by  each  of  the  parties  the  plaintiff  can  only  have  interest 

•22  Ala.  692  (1853). 

•■'31  Ala.  288  (1858). 

M33  U.  S.  433  (1889). 

"15  La.  Ann.  333  (1860). 

*  27  Ind.  527  (1867)  ;  30  Pa.  St.  340  (1858)  ;  37  Pa.  St.  4G5  (1800). 

«37  Pa.  St.  465  (1860). 

'3  Ind.  86  (1851);  87  Ind.  475  (1882);  6  Dana  (Ky.)  16(1837);  Hopk. 
(N.  Y.)  344  (1824);  3  Hill  (N.  Y.)  426  (1841);  1  Yeates  (Pa.)  4.MJ 
(1795) ;  28  Pa.  St.  211  (1857). 

8  44  Hun  (N.  Y.)  117  (1887). 

»  38  Mich.  1  (1878) ;  11  Hun  (N.  Y.)  385  (1877). 

'"2  Cai.  (N.  Y.)  253  (1804). 


106  THE    LAW   OF  INTEREST. 

dining  that  portion  of  the  period  of  dehiy  caused  by  the 
defendant.^ 

W/ien  interest  ends.  Interest  on  judgments  ceases  at 
the  return  and  contirmation  of  administrators',  executors' 
and  sheriflV  sales. ^  Defendants  are  not  chargeable  with 
interest  after  the  return  day  of  the  execution,  when  enougli 
has  been  raised  by  the  sale  of  property  to  pay  the  interest 
to  the  time,  unless  delay  in  the  payment  of  the  money  to 
the  plaintiff  has  been  occasioned  by  them.^  So  where  land, 
encumbered  by  judgments,  is  sold  by  a  sheriff,  and  the 
money  paid  into  court  for  distribution,  it  is  error  to  aUow 
interest  on  the  judgments  after  tlie  sale.* 

The  adjudication  of  commissioners  in  insolvency  is  not 
in  the  nature  of  a  judgment,  so  that  the  debts  would  bear 
the  legal  rate  of  interest  after  their  return.^  But  if,  after 
the  return,  for  any  reason,  any  money  is  left  over  it  should 
be  o-iven  to  those  to  whom  the  court  has  ordered  distribu- 
tion, as  interest.^  In  Rhode  Island,  the  report  of  the 
commissioners  is  regarded  as  a  judgment,  ascertaining  the 
sums  due  from  the  deceased  at  his  death,  and  interest  is 
allowed  thereon  as  upon  a  judgment  ;^  but  though  it  is  so 
regarded,  how  its  effect  can  be  any  different  than  that  of 
the  rule  in  Massachusetts  as  stated  in  the  preceding  sen- 
tence it  is  difficult  to  perceive. 

A  decree  binding  all  property  without  reference  to  the 
sale  of  any  part  in  particular  and  distribution  of  the  pro- 
ceeds, has  the  same  force  as  regards  interest  as  judgments 
have  when  contending  for  money. ^ 

'2  Den.  (N.  Y.)  188  (184G). 
i*  4  Walts  (Pa.)  71  (1835). 
3  G  Watts  (Pa.)  90  (1837). 
*25  All.  Rep.  (Pa.)  7G  (1892). 
n39  Mass.  3G0  (1885). 

6  4  Met.  (Mass.)  317  (1842). 

7  2R.  I.  CO  (1851). 

8  G5  Ga.  189  (1880).. 


INTEREST   ALLOWED   AS   DAMAGES.  107 

Decisions  of  the  county  court  allowing  claims  against  an 
estate  are  judgments,  and  will  bear  interest  tlie  same  as 
common  judgments.^  So,  are  such  claims  -when  they  arc 
approved  by  the  administrator,  says  the  Texas  court,  that 
being  a  sort  of  judgment.^ 

Comjwund  interest.  Judgments  generally  carry  interest 
(m  interest,^  but  if  the  supremo  court  simply  affirms  a  judg- 
ment, it  must  not  give  interest  on  the  aggregate  of  the 
jorincipal  and  interest  then  due,  but  on  the  original  judg- 
ment.* "Where  a  judgment  is  given  merely  as  a  security, 
interest  ought  not  to  be  calculated  on  the  whole  amount 
of  the  judgment  if  it  contains  both  principal  and  interest, 
but  only  on  the  sum  originally  due.^ 

Lien.  The  lien  of  a  judgment  is  good  for  interest  which 
it  includes,  and  which  has  accrued  on  it,  as  for  the  principal." 
"Where  interest  on  a  judgment  cannot  be  enforced  by  exe- 
cution, equity  does  not  treat  it  as  a  lien  in  respect  to  inter- 
est upon  it.^  Interest  which  accrues  after  judgment  on  a 
cause  of  action  bearing  interest  is  no  part  of  the  recovery, 
or  damages  assessed.^ 

Audita  querela.  Interest  on  a  debt,  whose  payment 
has  been  suspended  by  an  audita  querela,  is  not  recover- 
able on  the  bond  given  for  the  prosecution  of  the  audita.^ 

116  111.83  (1854). 

2  9  Tex.  517  (1853). 

3  5  Cul.  416  (1855)  ;  100  111.  276  (1881)  ;  8  Mon.  312  (1889)  ;  5  S.  &  R. 
(Ta.)  220(1819);  13  Tex.  75(1854);  12  W.  Va.  143  (1877);  14  W. 
Va.  737  (1879)  ;  contra,  2  111.  (1  Scam.)  137  (1834)  ;  IJ.  J.  Mar.  (Ky.) 
166  (1829);  3  La.  431  (1832);  1  Gill  (Md.)  372  (1843);  1  Nev.  613 
(1865)  ;  5  Biuu.  (Pa.)  61  (1812) ;  2  Hill  (S.  C.)  343  (1834).  Such  in- 
terest on  interest  is  not  compound  interest,  says  the  conrt  in  2  Bl.  Ch. 
(Mil.)  306  (1830).     See  more  citations  in  chapter  six. 

"30  Pa.  St.  340  (1858). 
*3Dall.  (Pa.)  506  (1799). 

6  26  Hun  (N.  Y.)  546  (1882)  ;  1  McC.  Ch.  (S.  C.)  53,  100  (1825). 

7  6  Paige  (N.  Y.)  88  (1836). 

8  2  Rtrob.  (S.  C.)  113  (1847). 

9  1  Root  (Conn.)  372  (1792). 


108  THE    LAW    OF    INTEREST. 

Apjjeal.  Ill  the  case  of  ;i  jiulgnient  on  nppcal,  interest 
is  to  1)0  calculated  during  the  appeal,^  but  on  the  amount  of 
the  princi[)al  only.- 

lieciving  judgments.  In  reviving  a  jiidgnient  \i\  w  scire 
facias,  interest  on  it  is  not  to  l»e  reckoned  for  the  time  it 
lias  })ecn  dormant.^  Where  a  judgment  has  been  revived 
by  i'e[)eated  writs  oi  scire  facias,  the  plaintiff  has  the  right 
to  charge  interest  on  the  aggregate  of  principal  and  inter- 
est due  at  the  time  of  rendering  judgment  on  each  writ."* 

On  a  judgment  on  a  scire  facias  against  bail,  the  jury 
may  give  interest  from  the  day  the  bail  became  fixed  ; 
that  is,  after  the  ex[)iration  of  the  time  allowed  ex  (jratia 
for  the  surrender;^  but  the  plaintifi"  must  not  neglect  to 
take  out  execution  and  proceed  against  the  bail.'' 

JSIolion  for  neiv  trial  and  exceptions.  Where  a  plaintiff 
ill  an  action  of  contract  is  delayed  of  his  judgment  by  the 
unsuccessful  motion  of  the  defendant  for  a  new  trial,  or 
when  the  defendant  fails  to  establish  his  exceptions,  the 
})laintiff  shall  always  haveinterest  on  the  sum  found  by  the 
verdict,  from  the  time  of  finding  the  same  to  the  time  of 
judgment.'^ 

All  judgments  and  decrees  when  stayed  by  injunctionj 
or  supersedeas,  or  appeal,  bear  interest,  unless  rendered 
on  causes  of  action  arising  ex  delicto,  says  the  Kentuck}' 
court. ^     The  United  States  circuit  court,  however,  is  not 

'  2  111.  (1  Scam.)  137  (1834) ;  0  Paige  (N.  Y.)  10  (183G) ;  24  Pa.  St. 
Z'.)l  (1855). 

^2  111.  (1  Scam.)  137  (1834). 

3  Bat.'s  Mart.  &  2d  Ilay'd  (N.  C.)  182  (1797);  4  Watts  (Pm.)  341 
(;i835);  2  Mill  (S.  C.)  14G  (1818);  1  McC.  (S.  C.)  171  (1821);  8  Vt. 
156  (183G)  ;  contra,  15  Ga.  435  (1854). 

*5  S.  &R.  (Pa.)  220  (1819). 

*  Col.  &  C.  Cas.  (N.  Y.)  G5  (1798). 

«  2  Johns.  (N.  Y.)  480  (1807). 

'  25  Conn.  494  (1857)  ;  G  Mass.  2G2  (1810).  In  Connecticnt,  there;  is 
snch  a  rnle  of  conrt.      18  Conn.  575.     Cohtra,  37  Md.  443  (187'.'). 

8  3  J.  J.  Mar.  (Ky.)  103  (ISi'O) ;  4  J.  J.  Mar.  (Ky.)  -140  (1830). 


INTEREST  ALLOWED    AS   DAMAGES.  109 

bound  to  allow  interest  on  the  costs  awarded  ])y  the  district 
court,  although  such  costs  are  included  in  the  decree  of  the 
circuit  court. ^ 

Review.  Where  a  court  ot  errors  affirms  the  judgment 
of  the  court  below,  interest  should  only  be  given  from  the 
time  of  the  affirmance  of  the  judgment  in  the  higher 
court. 2  The  court  in  New  York  says,  it  is  always  in  the 
discretion  of  the  court,  and  will  not  be  allowed  if  the  costs 
are  sufficient  to  cover  the  daraaofe.^ 

When  a  plaintiff's  verdict  on  review  is  less  than  his 
verdict  in  the  original  action,  the  defendant  is  entitled  to 
judgment  for  the  difference  between  the  verdicts,  and  in- 
terest on  the  difference  for  the  time  between  the  verdicts, 
irrespective  of  the  question  whether  he  has  paid  the  former 
judgment.*  A  judgment  on  review  of  a  judgment  thiit  has 
been  paid,  the  verdict  being  reversed,  should  contain  the 
interest  on  the  first  judgment  from  the  time  it  was  paid  to 
the  time  of  the  judgment  on  review.^ 

Hoio  collected.  Executions  must  follow  the  judgments  ; 
that  is,  if  a  judgment  gives  interest  the  execution  must.s 
Under  a  judgment  at  law,  no  interest  subsequent  to  the 
date  of  the  judgment  can  be  recovered  on  execution  ;^  but 
an  action  must  be  brought.^  A  levy  on  execution  for  such 
interest  would  be  invalid.^  When  statutes  give  the  author- 
ity to  collect  on  execution  interest  on  the  judgment  accru- 

1  118U.  S.  507  (188G). 

2  15  Johns.  (N.  Y.)  221  (1818)  ;  4  Cow.  (N.  Y.)  53  (1825). 
••'2  Weud.  (N.  Y.)  209  (1829). 

^54N.  H.  9G  (1873). 

*54N.  H.  34G  (1874). 

6  1  Nev.  613  (18G5)  ;  14  Nev.  405  (1879). 

U  Brev.  (S.  C.)  454  (1804). 

«2  Yes.  Jr.  (Eng.)  1G2  (1793);  15  N.  II.  337  (1844).  Statutes  geu- 
erally  provide  for  interest  on  judgments  accruing  after  their  rendition 
to  be  collected  on  execution. 

9lNev.  G13  (1865). 


110  THE    LAW   OF   INTEREST. 

inir  at'tcM'  the  judgment  wus  rendered,  the  levy  on  execution 
can  he  for  interest  only  to  the  time  of  making  the  levy,^ 
that  is,  ^vhcn  the  levy  is  completed. ^ 

Equity.  The  practice  of  allowing  interest  on  judgments, 
etc.,  in  equity  varies  somewhat  from  the  practice  at  law. 
Equity  will  decree  interest  on  a  l)ond  on  judgment  beyond 
the  penalty  against  the  principal  debtor.^ 

A  direction  to  a  master  to  compute  the  amount  due  on 
a  judgment  in  tort,  is  not  a  positive  direction  to  compute 
interest  upon  it.  The  allowance  of  interest  on  such  u 
judgment  is  not  a  matter  of  course  in  equity.* 

Sureties  on  a  replevin  bond  nuist  pay  interest  on  dam- 
ages from  the  time  of  the  judgment  in  the  original  action.^ 

Foreign  judgments.  Foreign  judgments  are  generally 
held  not  to  bear  interest,*' unless  the  original  cause  of  action 
bore  interest,"  or  by  proof  that  the  foreign  state  allows  in- 
terest on  judgments,^  or  by  the  terms  of  the  judgment 
itself  it  bears  interest.^  In  the  latter  case,  the  plaintiff 
need  not  show  what  the  law  of  the  place  where  the  judg- 
ment was  obtained  is,  because  the  interest  is  ascertainable 
from  the  judgment. ^°     If  it  is  settled  that  a  foreign  judg- 

1  2  Heath  (Me.)  423  (1854). 

2  2  Allen  (Mass.)  5G2  (1861) ;  9  Allen  (Mass.)  147  (1864). 
MSGrat.  (Va.)  354  (1856). 

*  3  Paige  (N.  Y.)  100  (1832)  ;  5  Paige  (N.  Y.)  543  (1836). 

*  14  Ore.  293  (1886). 

6  4  Campb.  (Eng.)  380  (1816)  ;  2  Cat.  99  (1852)  ;  contra,  7  Col.  561 
(1884)  ;  25  111.  95  (1860),  -without  any  averment  of  the  law  of  the  for- 
eign countr\-;  129  Mass.  600  (1880),  which  hokls  that  a  forei.un  jiulg- 
ment  is  a  liquidation  of  damages  that  will  carry  interest. 

'  3  McC.  (S.  C.)  166  (1825)  ;  3  Tex.  487  (1818).     See  the  statutes. 

"20  Ala.  629  (1852) ;  2  Cal.  99  (1852) ;  contra,  Breesc  (III.)  298,  378 
(1830) ;  25111.  83  (I860;,  which  allows  interest  on  a  forei,y;n  judgment 
Avithout  alleging  that  interest  is  allowed  by  the  state  where  the  judg- 
ment was  recovered;  46  111.  69  (1867). 

»i:3  Ala.  722  (1848) ;  Prcese  (III.)  298  (1830). 

'"Breese  (111.)  1.98  (1830). 


INTEREST    ALLOWED    AS    DAMAGES.  HI 

ment  carries  interest,  the  general  rule  is  to  allow  the  legal 
rate  of  the  pUice  where  the  action  on  the  judgment  is 
])rought ;  ^  but  if  it  is  claimed  that  the  rate  of  interest  is 
different  in  the  state  in  which  the  judgment  was  rendered, 
that  fact  must  be  averred  and  proved. - 

(s)  Legacies.  A  testator  may  order  that  interest  be 
allowed  upon  a  legacy,  and  from  what  time  ;^  but,  gener- 
ally, it  is  allowed,  from  the  time  when  the  legacy  is  pay- 
able,* availability  of  assets  making  no  difference  in  the 
rule,^  and  no  demand  being  necessary.*'  The  period  from 
which  the  statute  of  limitations  begins  to  run  and  the  time 
from  which  interest  is  payable  are  generally  identical.^  A 
legacy  given  to  a  grandchild,  an  infant,  to  be  paid  when 
the  wife  of  the  testator  thought  best,  she  dying  about 
twenty  years  afterward,  without  paying  it,  no  demand 
having  been  made,  interest  was  allowed  on  the  legacy 
from  the  death  of  the  testator,  the  wife,  who  was  execu- 
trix, being  deemed  a  trustee  for  the  child. ^  Where  a 
particular  legacy  is  due  upon  demand,  a  demand  for  tlie 

'  38  Iowa  237  (1874)  ;  5  Gray  (Mass.)  9  (1855) ;  129  Mass.  GOO  (1880) ; 
136  Mass.  3U  (1884) ;  contra,  72  Cal.  2G4  (1887),  which  allows  the  legal 
rate  of  the  foreign  state,  if  no  rate  is  named  in  the  judgment. 

2  38  Iowa  237  (1874). 

3  13r)  Fa    St.  374  (1890). 

"  1  Cox  (Eng.)  133  (1784)  ;  9  Beav.  (Eng.)  1G4  (184G) ;  15L.  J.,  N.  S., 
Ch.  (Eng.)  193  (1846);  10  Jur.  (Eng.;  IsO;  12  L.  T.,  N.  S.  (Eng.) 
763;  34  Ga  399  (18G6)  ;  106  Mass.  586  (1871);  20  Atl.  Hep.  (N.  H.) 
387  (1890);  2  Johns.  Ch.  (N.  Y.)  614  (1817);  1  Barb.  (N.  Y.)  77 
(1845)  ;  12  N.  Y.  (2  Kern.)  472  (1855)  ;  127  N.  Y.  402  (1891)  :  5  Jones 
Eq.  (N.  C.)  4.  (1859)  ;  6  Jones  Eq.  (N.  C.)  224  (1861)  ;  62  Pa.  St.  139 
(1869)  ;    Bail.  Eq.  (S.  C.)  274  (1831). 

s  1  Sch.  &  Lef.  (Ire.)  10  (1802)  ;  106  Mass.  586  (1871)  ;  58  Vt.  95 
(1886). 

«  2  Haml.  (Me.)  204  (1889)  ;  106  Mass.  586  (1871)  ;  contra,  Pre.  Ch. 
(Eug.)161  (1701). 

'  27  Beav.  (Eng.)  448  (1857)  ;  3  Jur.,  N.  S.  (Eng.)  1237  (1857)  ;  27 
L.  J.,  Ch.  (Eng.)  545  (1858). 

«  1  Vern.  (Eng.)  251  (1684). 


112  THE   LAW    OF    INTEREST. 

principal  is  a  demand  for  both  principal  and  interest,  with- 
out an  express  stipulation  for  interest.^  The  fact  that  the 
testator  directed  in  his  will  that  a  legacy  bo  paid  "  next 
after  my  lawful  debts  ;"2  or, "as  soon  as  the  same  can  he 
conveniently  done  from  sales  and  collections  of  my  prop- 
erty without  sacrifice  ;"^  or,  "forthwith  upon  my  decease  ;"* 
or,  "as  soon  as  possible,"^  makes  no  diilerence  in  the  rule. 
Neither  would  the  simple  fact  that  an  iulaiit  legatee  had 
no  guardian,'^  nor  a  feme  covert  had  no  trustee,"  make  any 
diilerence.  If  a  testator  directs  that  legacies  shall  be  paid 
within  three  years,  interest  does  not  begin  to  run  until 
the  end  of  three  years  from  his  decease.^  Where  legacies 
are  to  be  paid  out  of  the  proceeds  of  real  estate  wdiich  was 
not  to  be  sold  for  two  years,  interest  does  not  run  till  the 
end  of  that  time.^  Neither  does  a  pecuniary  legacy  bear 
interest  when  the  settlement  of  an  estate  is  protracted  by 
litigation  three  or  four  years,  when  such  legatee  has  had 
the  benetit  of  it  all  the  time.^° 

Interest,  however,  will  not  be  decreed  on  a  legacy, 
where  it  appears  that,  though  not  actually  appropriated  to 
the  legatee,  it  has  been  lodged  at  a  bank  where  he  enjoyed 
the  benefit  of  it  l)y  the  banker's  releasing  to  him  in  con- 


'17  La.  328  (1841). 

2  106  Mass.  58G  (1871). 

3  100  Mass.  58G  (1871). 
'3  Md.  Ch.  52G  (1850). 
*3  Md.  Ch.  52G  (1850). 
6  106  Mass.  58G  (1871). 
^13  Ala.  554  (1848). 

^  lOfi  Mar,s.  5SG  (1871)  So,  if  it  is  to  be  paid  "as  soon  as  convenient,' 
•within  three  years.  2  Y.  &  Coll  (Eng.)  525  (1837).  Co?!«ra,  53  L.  J., 
Ph.  Div.  (Eng.)  525  (1884);  50L  T.  N.  S.  (Eng.)  3.'')5  (1884).  These 
two  cases  say  that  interest  in  such  a  case  begins  to  run  one  year 
after  the  decease  of  the  testator. 

»roke  P.  C.  (Eng.)  97. 
•MO  Coun.  408  (1849). 


INTEREST    ALLOWED    AS    DAMAGES.  113 

sequence  the  interest  on  a  sum  of  equal  amount  due  by 
him  to  the  bank ;  ^  or  if  it  has  been  brought  into  court, 
while  it  remaius  there,  unless  it  is  placed  at  interest  by 
the  court,  when  it  will  carry  what  it  earns. ^ 

Where  a  certain  amount  of  money  is  given  to  children 
of  the  testator  in  one  sum,  to  be  divided  between  them 
equally,  their  shares  do  not  bear  interest  from  the  end  of 
one  year  after  the  testator's  death  as  against  each  other.^ 

Specific  legacies.  Unless  the  terms  of  the  will  are 
otherwise,  specilic  legacies  bear  interest  from  the  testator's 
death,*  though  they  are  not  to  be  paid  or  delivered  until 
a  future  day.^  So,  if  the  legacy  is  to  be  paid  out  of  certain 
assets  drawinof  interest.^ 

General  lerjacies.  General,  or  pecuniary  legacies  begin 
to  draw  interest  one  year  after  the  death  of  the  testator,^ 


1  Wall.  Lyn.  (Ire.)  358  (1785). 

2  2  P.  W.  (Eng.)  27  (1722). 

3  13  Rich.  Eq.  (S.  C.)  180  (1867). 

*2  Ves.  sr.  (Eug.)  5G3  (1754);  1  Hous.  (Del.)  382  (1857);  5  Geo. 
(Miss.)  510  (1857)  ;  41  N.  H.391  (1860)  ;  5  Jones  Eq.  (N.  C.)'4  (1859)  ; 
5  W.  &  S.  (Pa.)  30  (1842). 

'5  Geo.  (Miss.)  510  ri857). 

«G  Jones  Eq.  (N.  C.)  305  (1863). 

n  Ves.  sr.  (Eng.)  209  (1749);  1  Ves.  (Eng.)  367  (1791);  7  Ves. 
(Eng.)  89  (1802);  10  Yes.  (Eng.)  333  (1804);  13  Ves.  (Eng.)  333 
(1807)  ;  2  DeG.,  J.  &  Sm.  (Eng.)  373  (1864)  ;  49  L.  T.,  N.  S.  (Eng.) 
554  (1883)  ;  24  L.  R.,  Ch.  Div.  (Eng.)  616  (1883)  ;  1  Sch.  &  Lef.  (Ire.) 
10  (1802)  ;  1  IIous.  (Del.)  382  (1857)  ;  2  Ilaml.  (Me.)  204  (1889)  ;  106 
Mass.  586  (1871)  ;  149  Mass.  82  (1889)  ;  Walk.  (Miss.)  179  (1824)  ;  41 
N.  H.  391  (1860)  ;  66  N.  H.  191  (1875)  ;  17  Stew.  (N.  J.)  506  (1888)  ;  2 
Dick.  (N.  J.)  179  (LS90)  ;  17  Hun  (N.  Y.)  341  (1879)  ;  5  Binn.  (Pa.) 
472  (1813)  ;  2  Pa.  St.  388  (1845)  ;  106  Pa.  St.  268  (1884)  ;  16  R.  I.  98 
(1889)  ;  4  Rich.  Eq.  (S.  C.)  254  (1852)  ;  3  Munf.  (Va.)  10  (1811).  So, 
if  it  Is  to  be  paid  "as  soon  as  convenient."  152  Mass.  74  (1890).  Con- 
tra, from  the  testator's  decease.  39  N.  H.  547  (1859) ;  2  Rand.  (Va.) 
409  (1824).  The  Alabama  court  says  interest  runs  from  eighteen 
months  after  the  testator's  decease,  but  statutes  have  probably  affected 
the  rule  there.     13  Ala.  554  (1848)  ;  55  Ala.  440  (1876). 


114  THE    LAW    OF    INTEREST. 

though  there  is  no  one  to  receive  them  t'ov  luiiny  years.^ 
So,  on  :x  legacy  to  a  legatee  in  remainder,  interest  will  be- 
(r'm  one  year  after  the  death  of  the  tenant  for  life.^  If  the 
time  of  payment  of  a  general  legacy  is  named  in  the  will, 
interest  will  he  allowed  only  from  and  after  that  tirae,^ 
notwithstanding  the  fact  that  the  legacies  maybe  vested  ;* 
and  when  that  period  arrives  the  legatee  avIU  be  entitled 
to  interest  even  though  the  legacy  be  charged  upon  a  dry 
reversion.^ 

This  rule  applies  to  similar  legacies  under  a  feme  covert's 
will  made  in  the  exercise  of  a  power  of  appointment.^ 

The  rule  is  the  same  Avhen  applied  to  a  legacy  given  to 
the  wife  in  lieu  of  dower. ^ 

Where  only  interest  or  income  is  given,  it  will  ])egin  to 
run  at  the  decease  of  the  testator;^  and  if  it  is  given  for 
the  life  of  the  legatee,  it  will  run  to  the  very  day  of  his 
death,  though  it  is  "yearly  interest"  that  is  given.'' 

When  a  legacy  is  given  payable  at  a  future  day  with  in- 
terest, and  the  legatee  dies  before  it  becomes  payable,  the 
arrears  of  interest  up  to  the  time  of  the  legatee's  death 
must  be  paid  to  his  personal  representatives. '"^ 


17  Grat.  (Va.)  377  (1851). 

23  Umii.  (Va.)  10  (1811). 

3  1  Veru.  (Eng.)  2GI  (1G84)  ;  3  Atk.  (Eng.)  101  (17-14);  1  Cox  Ch. 
(Eng.)  133  (1784)  ;  4  Ves.  (Eug.)  1  (1798)  ;  09  Iiid.  203  (1879)  ;  4  M. 
&  M'll.  (Md.)  38  (1797)  ;  1  Md.  Ch.  152  (1847)  ;  3  Md.  Ch.  2CG  (1851), 
526  (1850). 

*  Finch's  Trcs.  iu  Ch.  (Eng.)  337  (1712) ;  17  Ala.  39G  (1850). 

^2  Atk.  (Eng.)  108  (1740). 

8  2  Hem.  &  M.  (Eng.)  2G2  (1864). 

'45  L.  R.,  Ch.  Div.  (Eng.)  496  (1890). 

«7  Vcs.  (Eng.)  89  (1802) ;  17  Stew.  (N.  J.)  479,  506  (1888)  ;  2  Dick. 
(N.  J.)  73  (1890)  ;  55  Ilun  (N.  Y.)  503  (1890)  ;  2  Ames  (5  11.  I.)  353 
(1858). 

"1  Del.  Ch.  146  (1821). 

'"M'Cle.  (Eng.)  HI  (1824);  1  Del.  Ch.  146  (1821). 


INTEREST    ALLOWED    AS    DxVMAGES.  115 

The  devisee  of  lands  chtirged  with  a  legacy  is  lialjle  to 
pay  interest  on  the  legacy  from  the  time  it  is  payable, 
though  payment  is  not  demanded  l)y  the  legatee.^  A 
legacy  payable  out  of  a  general  fund  in  the  hands  of  the 
executor  is  not  a  legacy  charged  on  real  estate. - 

If  the  payment  of  a  legacy  is  charged  upon  land  of  a 
deceased  person,  interest  upon  it  runs  from  the  death  of 
the  deceased  ;  ^  but,  says  the  Indiana  court,  legacies  do 
not  bear  interest,  with  certain  modifications  of  the  rule, 
until  they  are  payable.*  However,  if  a  legacy  is  charged 
upon  the  residue  of  an  estate  yielding  rents  and  profits  it 
bears  interest  from  the  death  of  the  testator.^  If  lejjacies 
are  made  payable  infuturo,  out  of  the  personal  estate,  the 
general  rule  is  that  no  interest  is  allowed  until  after  the  day 
of  payment.^ 

"Where  a  legacy  is  charged  with  the  payment  of  a  certain 
sum,  bearing  interest  from  a  given  day,  which  is  long  be- 
fore the  death  of  the  testator,  it  appearing  that  the  legacy 
was  advanced  before  the  day  specified  for  interest  to  ac- 
crue, it  will  be  charged  with  interest  from  that  day.'' 

A  legacy  payable  by  instalments,  and  the  last  instal- 
ment expiring  before  the  testator's  death,  is  to  be  consid- 
ered as  a  legacy  payable  generally,  and  carries  interest 
from  one  year  after  the  testator's  decease.^ 

A  will  charged  the  support  of  a  person  during  life  upon 


»G  Johns.  Ch.  (N.  Y.)  33  (1822)  ;  1  Paige  (N.  Y.)  32  (1828). 

2 2  Johns.  Cas.  (N.  Y.)  200  (1801). 

^3  Del.  Ch.  269  (1869)  ;  37  Vt.  5C2  (18G5). 

*o  Ind.  18  (1854). 

*  ni  Ind.  277  (1875),  The  South  Carolina  court  holds  that  the  resi- 
duary legatee  is  liable  if  lie  knows  tliat  tlie  interest  on  other  legacies 
has  not  been  paid  or  provided  for.     Bail.  Eq.  (S.  C.)  274  (1831). 

65  Ind.  18  (1854). 

'3  Jones  Eq.  (N.  C.)  330  (1857). 

«9  S.  &R.  (Pa.)  409  (1823). 


116  THE    LAW    OF    INTEREST. 

certain  land  which  it  had  already  charged  with  the  pay- 
ment of  a  peenniary  legacy  to  another  i)er.-oii.  A  rcsidnary 
legatee  having  become  personally  liable  to  pay  the  pecu- 
niary legacy,  it  was  held  that  it  became  due  and  paya])le 
at  the  expiration  of  the  time  limited  for  tlie  payment  of 
debts  and  legacies  generally,  and  was  not  postponed  until 
the  death  of  the  person  whose  support  was  charged  upon 
the  land.^ 

An  executor  is  not  charged  with  interest  on  a  legacy 
to  an  infant  until  he  has  notice  of  the  appointment  of  a 
guardian.^' 

Contingent  legacies.  Contingent  legacies  do  not  bear 
interest  until  they  become  payable.^  Where  a  legacy  was 
given  to  a  girl  on  condition  that  she  lived  with  the  widow 
as  long  as  the  latter  lived,  interest  was  allowed  from  the 
time  of  the  widow's  death.* 

What  interest  belongs  to  the  residue.  The  interest  of  a 
fund  that  is  held  upon  a  contingency,  from  the  death  of 
the  testator  until  the  contingency  happens,  if  there  is  no 
previous  legatee  for  life,  or  if  there  is,  what  accrues  after 
the  death  of  such  previous  taker,  will  become  a  part  of 
the  residue.^  But  the  interest  that  accrues  during  the 
lime  of  such  life  interest,  or  until  a  specified  contingency^ 
happens,  belongs  to  such  previous  taker,  and  if  he  dies,  or 
the  contingency  happens,  without  its  having  been  collected 
to  the  day  of  his  death,  or  the  happening  of  the  contin- 
gency, the  uncollected  interest  which  thus  accrued,  belongs 
to  him,  or,  in  case  of  his  death,  will  pass  to  his  personal 


'80  Wis.  509  (1891). 
23  :\Iuuf.  (Va.)  198  (1812). 

34  Brown's  CU.   (E.ng.)  U4   (1792);  05  Cat.  25  (1884);  2  Dev.  Eq. 
(N.  C.)  30r,  (1833)  ;  44  Pa.  St.  140  (18G3)  ;   10  K.  I.  274  (1887). 
*23  Atl.  Rep.  (N.  J.)  501  (1892). 
■6  2  Atk.  (Elig.3  329  (1742)  ;  4  B.rowo's  Ch.  (Eug.)  144  (1792). 


INTEREST    ALLOWED    AS    DAMAGES.  117 

representatives,  and  not  become  a  part  of  the  residue.^ 
Interest  in  favor  of  the  remainder-man  does  not  begin  to 
rnn  until  the  death  of  the  life-tenant.^  It  is  immaterial 
whether  the  residue  is  only  given  generally,  or  directed  to 
be  laid  out  with  all  convenient  speed,  in  funds  or  securities, 
or  to  be  invested  in  lands.-^  But  where  the  residue  is  di- 
rected to  be  laid  out  in  land,  to  be  settled  on  one  for  life, 
Avith  the  remainder  over,  and  the  testator  directs  the  in- 
terest to  accumulate  in  the  meantime  until  the  money 
is  laid  out  in  land,  or  otherwise  invested  on  security,  the 
accumulation  ceases  at  the  end  of  one  year  from  the  tes- 
tator's death,  and  from  that  period  the  tenant  for  life  is 
entitled  to  the  interest.^ 

Maintenance.  There  is  a  great  exception  to  the  rule 
that  general  pecuniary  legacies  do  not  bear  interest  until 
a  year  has  elapsed  after  the  testator's  death. ^  It  makes  no 
difference  when  they  are  payable,  nor  whether  they  are 
vested  or  contingent,  general,  particular,  or  residuary  ;6 
and  this  is  true  even  if  legacies  are  ordered  to  accumulate 
till  the  legatees  are  of  ajje.^ 

This  is  the  case  of  a  parent  and  a  legitimate^  minor ^ 


'1  P.  Wm.  (Eng.)  500  (1718);  2  P.  Wm.  (Eng.)  419  (1727),  504 
(1728)  ;  Ambl.  (Eng.)  448  (17G4)  ;  1  Brown's  Ch.  (Eng.)  335  (1783)  ; 
5  Ves.  (Eng.)  335,  522  (1800)  ;  3  Mer.  (Eng.)  335  (181G)  ;  3  Myl.  & 
C.  (Eng.)  G88  (1838);  8  L.  J.,  N.  S.,  Ch.  (Eng.)  36  (1838);  2'jur. 
(Eng.)  1029  (1838);  5  Jones  Eq.  (N.  C.)  273  (1859). 

2  8lGa.  229  (1888). 

^G  Ves.  (Eng.)  520  (1801). 

"6  Ves.  (Eng.)  520  (1801)  ;  2  Sim.  &  St.  (Eng.)  396  (1825). 

^3  Ves.  (Eng.)  10  (1795)  ;  2  Johns.  Ch.  (N.  Y.)  614  (1817). 

n  Eq.  Cas.  Abr.  (Eng.)  301  (1729)  ;  48  Pa.  St.  80  (1864). 

UDick.(Eng.)310  (1757). 

«  15  Ves.  (Eng.)  301  (1808). 

»  1  Swans.  (Eng.)  553  (1818)  ;  15  Sim.  (Eng.)  513  (1847)  ;  16  L.  J., 
N.  Sm  Ch.  (Eng.)  305  (1847)  ;  11  Jur.  (Eng.)  403  (1847). 


118  THE    LAW    OF    INTEREST. 

child. ^  The  exception  is  phiccd  upon  the  frround  that  it 
must  have  been  the  intention  of  the  parent  to  have  the  in- 
terest paid  as  means  of  support  of  the  infant  from  time 
to  time,  when  the  'will  made  no  other  provision  for  it." 
The  rule  means  that  when  a  testator  gives  a  pecuniary  leg- 
n(■^'  to  his  ciiihl,  and  no  other  arrangeinent,  or  only  a 
Iritling  provision,  is  made  for  the  maintenance  of  the  child 
in  the  will,  he  shall  be  allowed  interest  on  the  legacy  from 
the  decease  of  the  testator,^  whether  a  time  of  payment 
is  stated  in  the  will  or  not.^  It  extends  to  adopted  chil- 
dren,'^ and  to  those  infants  to  whom  the  testator  has  put 
himself  2/1  loco  2Xirenlis,'^  though  he  is  not  under  any  legal 
obligation  to  support  them  ; "  but  it  does  not  api)ly  to  other 
relatives.^     AVhcre  a  testator  has  voluntarily  entered   into 

i2Veut.  (Eng.)  346  (1G71)  ;  Pre.  Ch.  (Eng.)  337  (1712);  1  Atk. 
(Eug.)  507  (1738);  2  Atk,  (Eng.)  211  (1741);  3  Atk.  (Eng.)  102 
(1744);  1  Ves.  sr.  (Eng.)  209  (1749);  3  Ves.  (Eng.)  283  (1796);  4 
Vcs.  (Eng.)  1  (1798)  ;  15  Ves.  (Eng.)  301  (1808)  ;  1  Russ.  &  M.  (Eng.) 
555  (1830);  Taml.  (Eng.)  476  (1830);  G  L.  J.,  N.  S.,  Ch.  (Eng.)  146 
(1837);  8  L.  J.,  Ch.  (Eug.)  141;  17  Jnr.  (Eng.)  1044  (1853);  4  Del. 
Ch.  44  (1868). 

*rrec.  Ch.  (Eng.)  337  (1712)  ;  5  L.  J.,  N.  S.,  Ch.  (Eng.)  120  (1836)  ; 
9  Hare  (Eng.)  649  (1852)  ;  25  Vt.  127  (1853). 

»2  Vent.  (Eng.)  346  (1671)  ;  4  Del.  Ch.  44  (1868)  ;  5  Ind.  18  (18.';4)  ; 
20  Atl.  Rep.  (N.  H.)  387  (1890);  17  Stew.  (N.  J.)  479,  506  (1888);  6 
Paige  (N.  Y.)  298  (1837)  ;  2  Rich.  Eq.  (S.  C.)  68  (1845). 

^3Md.  Ch.  526  (1850). 

*41  N.  H.  391  (1860). 

67  L.  .J.,  N.  S.,  Ch.  (Eng.)  118  (1838)  ;  12  L.  J.,  N".  S.,  Ch.  (Eng.) 
420  (1843)  ;  7  Jnr.  (Eng.)  572  (1843)  ;  3  Md.  Ch.  526  (1850)  ;  79  N.  Y. 
130  (1879)  ;  48  Pa.  St.  80  (1864). 

779  N.  Y.  136  (1879). 

"SVes.  (Eng.)  10  (1795);  6Ves.  (Eng.)  546  (1801);  12  Ves.  (Eng). 
461  (1806);  15  Ves.  (Eng.)  301  (1808);  49  L.  T.,  N.  S.  (Eng.)  554 
(1883);  1  Sch.  &  Lef.  (Ire.)  1  (1802)  ;  4  Geo.  (Miss.)  126  (1857);  2 
Johns.  Cas.  (N.  Y.)  200  (1801)  ;  2  Dev.  Eq.  (N.  C.)  366  (1833) ;  2  Pa. 
St.  221  (1845)  ;  Rich.  Eq.  Cas.  (S.  C.)  397  (1832) ;  contra,  1  Con.  &  L. 
(Ire.)  284  (1842)  ;  2  Dr.  &  War.  (Ire.)  133  (1842) ;  4  Ir.  Eq.  R.  (Ire.) 
339  (1842) ;  6  Paige  (N.  Y.)  298  (1837).  * 


INTEREST   ALLOWED   AS   DAMAGES.  119 

a  bond  with  a  parish  to  pay  a  weekly  maintenance  for  a 
natural  child  as  his  son,  and  has  continued  such  payments 
lip  to  his  death,  he  is  deemed  to  have  placed  himself  in  loco 
jxiventis.^ 

Posthumous  children.  In  the  case  of  a  child  in  venire 
sa  mere  at  the  time  of  the  death  of  the  father,  interest  is 
allowed  only  from  its  birth. ^ 

I/a  child  is  already  supported  by  his  parent,  not  being 
the  legitimate  natural  child  of  the  testator,  or  if  he  is  of 
suificient  ability  to  discharge  this  moral  obligation,  a  leg- 
acy to  such  child  does  not  carry  interest  from  the  testa- 
tor's death,  even  though  maintenance  be  immediately 
given ;  so  that  the  interest  will  accumulate  for  the  child's 
benefit  until  the  principal  becomes  payable.^  Nor  is  a 
legitimate  child  entitled  to  interest  in  the  way  of  mainte- 
nance, if  he  has  a  maintenance,  although  it  may  be  less  than 
the  amount  of  the  interest  on  the  legacy.*  So  a  person 
maintaining  an  infant  legatee  is  not  chargeable  with  inter- 
est on  the  legacy.^ 

Express  maintenance.  The  rule  as  to  presumed  in- 
terest for  maintenance  is  never  applied  if  the  testator 
expressly  gives  maintenance ;  ^  as  where  a  will  says  that 
the  income  of  a  certain  amount  is  for  the  maintenance  ot 

'  Coke  P.  C.  (Eng.)  9G;  2  Keen  (Eng.)  598  (1838);  7  L.  J.,  N.  S., 
Ch.  (Eng.)  118  (1838). 

-  2  Cox  Ch.  (Eng.)  425  (179G). 

3  3  Atk.(Eng.)  399  (1746)  ;  1  Brown's  Ch.  (Eng.)  387(1784)  ;  3  BroAvn's 
Ch.  (Eng.)  60  (1789),  416  (1791)  ;  4  Brown's  Ch.  (Eng.)  223  1793)  ;  4 
Ves.  (Eng.)  498  (1799);  4  Madcl.  (Eng.)  275  (1819).  The  principal 
may  be  used  if  the  interest  is  insufficient,  says  the  court  in  4  Johns. 
Ch.  (N.  Y.)  100  (1819). 

"SMd.  Ch.  526  (1850). 

*2  Hob.  (Va.)  492  (1842). 

«  1  Cox  (Eng.)  433  (1788)  ;  37  L.  T.,  N.  S.  (Eng.)  204  (1877)  ;  5  L. 
R.,Ch.  Div.  (Eng.)  837  (1877);  47L.J.,Ch.  (Bng.)  118  (1877);  25  W. 
E.  (Eng.)  507;  2G  W.  R.  (Eng.)  65;  2  Ames  (5  R.  I.)  353  (1858). 


120  THE  LAW  (^F  INTEREST. 

the  Icgutcc.^  Such  interest  will  l)cgiii  at  the  death  of  the 
testator;-  and  whether  the  parent  is  able  to  support  the 
child  docs  not  come  into  the  cpiestion.^  So,  on  legacies 
to  a  natural  child  of  the  testator,  with  directions  to  apply 
a  competent  part  of  the  interest  for  maintenance.*  It  is 
the  same,  also,  where  an  intention,  though  not  expressed 
is  fairly  inferable  from  the  will  that  the  legacy  shall  l)e  for 
the  maintenance  of  the  child. ^  A  limited  allowance  for 
maintenance,  however,  does  not  exclude  an  implied  gift  of 
interest  on  a  contingent  legacy  during  the  period  for  which 
maintenance  is  not  provided.'' 

Hate.  Where  maintenance  or  interest  is  given  by  the 
will,  and  the  rate  specified,  the  legatee  will  not,  generally, 
be  entitled  to  claim  more  than  the  rate  specified  ;^  but  he 
is  entitled  to  no  more  than  will  support  him.^ 

Legacies  in  general.  If  a  legatee  has  a  claim  against  the 
estate,  the  offset  should  be  made  as  of  the  time  of  the  death 
of  the  testator,  if  the  question  of  interest  is  involved, 
says  the  Massachusetts  court. ^  The  Iowa  rule  is,  that  a 
general  legatee's  claim  will  Ijear  interest  until  the  legacy 
is  payable.^'' 

AMiere  a  statute  provides  that  executors  shall  pay  the 
taxes  on  the  estates  in  their  hands,    and   a  will  orders 


''  1  Bear.  (Eng.)  271  (1839)  ;  3  Jur.  (Eng.)  101  (1839). 

2 3  Yes.  &  B.  (Eng.)  183  (1814)  ;  8  L.  R.,  Eq.  (Eng.)  119  (1869)  ;  41 
L.  J.,  Ch.  (Eng.)  G99  (1872)  ;  36  N.  Y.  15  (1866)  ;  Z\  IIoav.  Tr.  (X.  Y.) 
115  (1866). 

3 4  Brown's  Ch.  (Eng.)  223  (1793)  ;  3  Ves.  (Eng.)  730  (179S). 

••3  Swans.  (Eng.)  G89  (1786)  ;  2  Kuss.  &  M.  (Eng.)  343  (1831). 

n  Swans.  (Eng.)  561  (1818). 

^2  L.  I{.,Eq.  (Eng.)  479  (1866). 

'3  Vcs.  (Eng.)  283  (1796). 

«  12  Beav.  (Eug.)  357  (1849) ;  13  Jur.  (Eng.)  737  (1849)  ;  18  L.  J., 
N.  S.,  Ch.  (Eng.)  469  (1840). 

•l4.-,  .Mas.s.  239  (1887). 

>"  70  loAva  368  (1886). 


INTEREST    ALLOWED    AS    DAMAGES.  121 

that  a  certain  sum  slioukl  be  set  apart  for  the  benefit  of  the 
testator's  sister  during  her  life,  the  interest  therefrom  to 
be  paid  to  her  "as  her  absolute  property,"  and  that  after 
her  decease  such  sum  should  remain  in  the  testator's  es- 
tate for  distribution,  no  part  of  such  interest  can  bo  used 
to  pay  the  taxes  on  the  principal  sum,  or  the  expense  of 
its  management,  but  the  expense  must  be  paid  from  the 
general  assets  of  the  estate.^ 

Comjtromise.  In  the  case  of  the  compromise  of  a  will, 
the  legatees  and  heirs  to  get  certain  sums  each  and  the 
remainder  to  be  divided  equally  between  them,  no  mterest 
should  be  allowed  to  the  legatees.^ 

Rate.  Where  legacies  bear  a  conventional  rate  of  in- 
terest by  the  will,  they  bear  the  legal  rate  after  they 
become  payable.^  In  England,  legacies  payable  out  of 
personal  estate  are  generally  allowed  five  per  cent  in- 
terest, but  if  payable  out  of  real  estate  only  four  per 
cent,  because  real  estate  is  esteemed  to  be  a  better  se- 
curity.^ 

Compound  interest  is  not  allowed  on  a  legacy,^  unless 
the  failure  to  pay  arose  from  the  fault  of  the  executor.*^ 
So,  a  devisee  of  lands  charged  with  the  payment  of  lega- 
c^es  IS  liable  for  simple  interest  only.^ 

Law  of  what  place  governs.  The  law  of  interest  on 
legacies  is  that  of  the  place  where  the  estate  is  being 
settled.^ 

'  33  N.  E.  Eep.  (Ind.)  3C1  (1893). 

2  128  Mass.  203  (1880). 

3  2Desau.  (S.  C.)  170  (1803). 
*3  Atk.  (Eng.)  402  (1746). 
UEand.  (Va.)  181  (182r,). 
^106  Mass.  586  (1871). 

7  66  Cal.  157  (1884). 

8  38L.  T.,  N.  S.  (Eng.)  215   (1878)  ;  2G  W.  K.  (Eug.)  326,  V.  C.  U. 


122  THE    LAW    OF    IXTEREST. 

Contest  of  will.  The  fact  tlisit  the  loixiitee  attempted,  at 
great  co.st  to  tlio  estate,  to  set  the  Avill  aside  does  not 
chanirc  these  rules. ^ 

Ijeijacij  of  a  debt.  Interest  is  presumed  to  1)0  inchided 
ill  the  U'gacy  ot"  a  del)t.^  So  a  gift  l)y  will  of  a  uote  car- 
ries with  it  the  interest  that  is  due  upou  it.^  A  legacy 
given  in  payment  of  a  debt  bears  interest  from  the  death 
of  the  testator.* 

Tender.  If  a  legatee  will  not  receive  the  legacy  when 
it  is  tendered  to  jiim,  he  cannot  recover  interest  ii[)()n 
it  after  that  time.^  So  a  refusal  by  a  legatee's  hu>!>and 
to  accept  a  legacy  stops  the  running  of  interest  upon  it." 

{t)  Mechanics^  liens.  A  sum  of  money  due  for  labor 
or  materials,  or  both,  for  which  a  mechanics'  lien  has  been 
filed,  does  not  bear  interest,^  except  from  the  date  of  the 
petition  to  enforce  the  lien, ^^  if  no  claim  is  made  for  it  in 
the  petition.^  If  the  word  "  interest"  is  inserted  in  the 
bill  when  the  materials  are  sold  for  cash,  interest  will  l)e 
allowed  from  the  time  the  delivery  of  the  articles  is  com- 
pleted, ^o 

There  may  be  an  item  in  the  account  that  would  gen- 
erally carry  interest;  if  so,  interest  will  be  allowed  upon 
it.^i 

(ii)  Money  had  and  received.      Interest  as  damages  is 

'51  Ind.  277  (1875). 

2  2  Mart.  N.  S.  (La.)  44G  (1824). 

3  2  Dev.  Eq.  (N.  C.)  488  (1834). 

*  17  SteAV.  (N.  J.)  479,  50G  (1888). 
^  10  Md.  352  (185C). 
«4  Call  (Va.)  G05  (1803). 
'20  S.  C.  5.55  (1883). 

''HI  IMass.  280  (1880).    From  the  time  of  filing  the  pclitiou,  says 
the  court  in  2  Allen  (Mass.)  C05  (1801). 
»lBradw.  (111.)  94  (1878). 
'0  50  Md.  133  (1878). 
"  1  Oi-o.  183  (1855). 


INTEREST   ALLOWED    AS    DAMAGES.  123 

not  generally  allowed  on  money  had  and  received^  1)y  one 
Avho  believes  it  to  be  his  due,  or  for  another  person, ^  until 
it  has  been  demanded  by  the  party  entitled  to  it,^  and  in 
Miinc:  for  the  monev  the  demand  must  be  alleijed/^  If 
there  has  been  no  demand,  the  interest  begins  to  run  from 
the  date  of  the  writ  only.^  This  rule  applies  to  cases  of 
money  lent,  where  there  is  no  contract  for  interest  ;*'  also 
to  money  paid  by  mistake,^  or  on  a  void  execution.^  In 
the  last-named  case  it  can  be  collected  from  the  final 
judgment,^ 

Interest  is  allowed  on  money  had  and  received  if  there 
is  a  contract  to  that  effect,  either  express,  or  one  that  can 
be  implied  from  the  usage  of  trade,  or  from  special  circum- 
stances, or  from  written  securities  for  the  payment  of  the 
principal  at  a  given  time.^'^ 

>  7D.  &R.  (Eng.)  201  (1825). 

*  9S.  &R.  (Pa.)  409  (1823.) 

3  15  East  (Eng.)  223  (1812)  ;  3  Stark.  (Eng.)  132  (1822)  ;  5  C.  &  P. 
(Eng.)  498  (1833)  ;  46  Ala.  282  (1871)  ;  19  Conn,  548  (1849)  ;  4  Blf. 
(Incl.)  21  (1835),  164  (1836);  15  Pick.  (Mass.)  500  (1834)  ;  3  Met. 
(Mass.)  34  (1841);  4  Met.  (Mass.)  181  (1842);  14  Allen  (Mass.)  59 
(1867)  ;  1  Stew.  (N.  J.)  315  (1877)  ;  1  Dall.  (Pa.)  52  (1780)  ;  1  S.  &  R. 
(Pa.)  176  (1814)  ;  1  Bail.  (S.  C.)  201  (1829)  ;  contra,  64  Ala.  193  (1879)  ; 
1  Conn.  32  (1814)  ;  3  Caiues  (N.  Y .)  266  (1805)  ;  if  liquidated,  1  McC. 
(S.  C.)  449  (1821).  Tlie  court  in  1  Dall.  (Pa.)  349  (1788)  says, 
that  Avhere  one  lias  received  money  of  anotlier,  and  has  retained  it 
Avith  the  owner's  consent,  he  ought  to  pay  interest  on  it,  the  same  as 
for  money  lent. 

4  14  Allen  (Mass.)  59  (1867). 

*  100  U.  S.  119  (1879)  ;  15  Pick.  (Mass.)  500  (1834)  ;  129  Mass.  67 
(1880);  28  N.  11.  561  (1854). 

«  11  Met.  (Mass.)  124  (1846);  contra,  1  Binn.  (Pa.)  488  (1808);  17 
S.C.  313  (1881). 

7  19  Conn.  548  (1849)  ;  83  Ga.  627  (1889)  ;  31  Minn.  201  (1883)  ;  24 
N.  H.  417  (1852)  ;  1  Dall.  (Pa.)  52  (1781)  ;  1  McC.  (S.  C.)  97  (1821). 

8  19  Conn,  548  (1849)  ;  contra,  1  Pick.  (Mass.)  211  (1822). 
»  2  Root  (Conn.)  156  (1794). 

'"  15  East  (Eng.)  223  (1812);  3  Stark.  (Eng.)  132  (1822);  contra,  1 
Campb.  (Eng.)  50  (1807);  not  an  implied  agreement,  2  Scott  (Eng.) 
135  (1835)  ;  2  Bing.  N.  C.  (Eng.)  77  (1835). 


124  THE    LAW    OF    INTEREST. 

There  are  many  cases  where  interest  is  allowed  from  the 
day  the  money  is  paid  without  a  demand  ;^  as,  for  instance, 
where  a  purchaser  has  })aid  the  price  for  land,  when  inter- 
est will  be  decreed  to  him  till  he  recovers  cither  the  money 
or  the  particular  land  ;-'  or,  where  purchase  mone3'has  lain 
dead  when  the  vendor  could  not  make  a  title  f  or,  where 
the  consideratiou  has  failed  ;^  or,  ou  purchase  money  re- 
maining in  the  purchaser's  hands  to  pay  ofT  incumbrances,^ 
unless  tlie  purchaser  has  the  use  of  the  property,  when  he 
cannot  claim  interest;"  or,  on  a  void  judicial  sale  on  ex- 
ecution f  or,  where  the  plaintifl'paid  a  debt  that  had  been 
paid  by  another  party  who  was  liable  to  pay  it,  but,  with- 
out knowing  it  had  been  paid  f  or,  where  the  defendant 
received  rents  under  an  implied  trust  for  his  co-tenant  f 
or,  when  the  attorney  of  one  of  the  parties  in  an  inter- 
pleacU^r  suit,  pending  the  litigation,  on  his  own  motion, 
is  paid  over  the  fund  in  dispute  ;^*^  or,  Avherc  a  husl)aud 
durin<>-  coverture  received  money  belonging  to  the  corjnis 
of  the  wife's  separate  estate  upon  the  express  condition  that 
it  be  invested  :^^  or,  where  the  money  was  simply  loaned 


1  G-i  Ala.  193  (1879). 

8  G-t  Ala.  193  (1879)  ;  1  Paige  (N.  Y.)  244  (1828). 

3  32  L.  11.,  Ch.  Div.  (Eng.)  454  (188G)  ;  50  Iiid.  403  (1875). 

*  2  Eoot  (Conn.)  4G  (1793)  ;  50  Ind.  403  (1875)  ;  3  Bil)b  (Ky.)  529 
(1814) ;  5  J.  J.  ]\Iar.  (Ky.)  310  (1831)  ;  IG  Md.  190  (18G0) ;  7  Met.  (Mass.) 
438  (1844)  ;  6  Allen  (Mass.)  549  (18G3).  From  demand,  says  the  court 
in  85  Ga.  141  (1890).  This  is  true,  even  though  collusion  on  the  part 
of  the  purchaser  ^vas  the  cause  of  a  sale's  being  set  aside.  154  Mass. 
51  (1891). 

5  1  Sch.&Lef.  (Ire.)  132  (1803). 

e  28  Ga.  289  (1874)  ;  4  Dana  (Ky.)  dQ  (1S3G)  ;  IG  La.  35  (1840)  ;  8 
Rob.  (La.)  157  (1844) ;  9  Hob.  (La.^  458  (1845)  ;  11  C.  E.  Gr.  (N.  J.) 
202  (1874). 

7  10  Neb,  130  (1880). 

8  2  Root  (Conn.)  405  (179G). 
8  23  Ala.  34G  (1853). 

•o  87  Ala.  387  (1888). 
"  SO  Ala.  113  (1857). 


INTEREST    ALLOWED   AS   DAMAGES.  125 

to  him,  interest  is  recoverable  from  his  death  ;^or,  if  there 
was  coercion  or  other  improper  conduct  on  the  husband's 
part,  the  jury  may  give  interest  for  a  period  before  his 
death. ^  Where  mone}^  is  advanced  on  a  contract,  only  a 
part  of  which  is  fulfilled,  interest  is  allowed  on  the  excess 
advanced.^  So  interest  is  allowed  on  advances  made  under 
a  contract,  without  an  express  agreement,  to  pay  it  ;^  but 
a  commission  is  a  fair  compensation  for  the  use  of  the 
name  and  credit  of  an  acceptor,  and  interest  is  not  then 
allowable  on  advances  to  take  up  an  acceptance,  when 
there  is  no  agreement  to  pay  any.^  Where  the  amount 
recovered  does  not  adequately  compensate  for  the  damage 
interest  is  given.*'  Where  the  purchase  money  was  paid, 
and  the  title  ftiiled,  interest  was  allowed  in  one  case  from 
the  time  the  vendor  was  notified  of  the  purchaser  to  re- 
claim the  consideration.^  Where  a  vendor  caused  delay, 
and  the  interest  exceeded  the  rents,  the  purchaser  is  per- 
mitted to  elect,  to  pay  the  interest  or  to  relinquish  his 
riffht  to  the  rents. ^ 

It  is  not  necessary  where  a  party  desires  to  rescind  a 
contract  by  the  repayment  of  money  paid  thereon  that  he 
also  pay  interest  on  the  amount.^ 

When  specific  performance  is  deci'^ed  in  fiivor  of  the 
vendor,  he  is  entitled  to  receive  interest  on  the  purchase 
money  from  the  tender  of  the  deed,  when  the  purchaser 
is  in  possession,  and  has  not  put  the  vendor  in  default.^'' 

'  3  Whart.  (Pa.)  48  (1837). 

2  3  AVhart.  (Pa.)  48  (1837). 

3  76  111.  484  (1875)  ;  3  C.  E.  Gr.  (N.  J.)  401  (1867). 

■»  46  Mich.    230   (1881);  3  Cai.   (N.  Y.)  266  (1805);  5  Cow.  (N.  Y.) 
587  (1825)  ;  15    N.  Y.  (1  Smith)  397  (1857). 
^  10  La.  295  (1836). 
s  44  Mich.  157  (1880). 

7  IN.  M.  19(1852). 

8  Hoffm.  (N.  Y.)  71  (1841). 
»  52  Iowa  137  (1879). 

"'  21  Barb.  (N.  Y.)  381  (1855). 


126  THE    LAW    OF   INTEREST. 

One  wlio  has  received  rents  and  profits  of  land,  and 
obtained  interest  on  them,  not  being  entitled  to  them,  as 
against  a  judgment-debtor  having  an  equitable  right  of 
the  property,  for  the  satisfaction  of  his  debt,  and  to  the 
rents  and  profits  that  they  may  be  so  applied,  is  charge- 
able "vvitli  interest,  on  accounting  for  the  rents  and  profits, 
although  he  resisted  the  claim  in  good  faith. ^ 

If  an  executor,  through  a  third  person,  buys  land  be- 
longing to  the  estate  and  the  sale  is  set  aside,  and  the 
deed  cancelled,  he  -will  not  be  allowed  interest  on  the 
money  paid.- 

In  an  action  to  recover  contribution  to  a  general  average, 
interest  will  run  from  the  time  that  the  money  upon  which 
the  average  arose  was  advanced.^ 

If  the  defendant  is  a  wrong-doer  in  obtaining  or  detain- 
ing money,  interest  is  allowed  on  it  from  the  time  of  the 
wrongful  obtaining  or  detaining. ^ 

Where  one  has  money  of  another  in  his  hands,  and  uses 
it,  he  cannot  avoid  payment  of  mterest  upon  it  by  answer- 
ing that  he  does  not  know  what  profit  he  has  made  by  its 
use.  In  such  a  case  he  is  at  least  liable  for  interest  while 
it  was  so  employed.^ 

These  rules  of  law  on  money  lent  and  money  paid  ap- 
ply when  the  money  forms  matters  of  account  as  well  as 
when  they  are  detached  transactions.^  But  rests  arc  not 
allowed  if  there  is  no  wrongful  obtaining  or  detention.^ 

Rate.  The  holder  of  collateral  paper  is  liable  for  in- 
terest at  the   legal  rate  from  the  collection  of  the  same, 


'  40  Barb.  (N.  Y.)  579  (18GG). 

2  5  Ore.  93  (1873). 

3  8  S.  &  R.  (Pa.)  103  (1822). 
*  11  Met.  (Mass.)  124  (184C). 
*8  Ala.  C32  (1845). 

«9R.  I.  32  (18G8);  10  K.  I.  501  (1873). 
'91  N.  Y.  74  (1883). 


INTEREST   ALLOWED   AS   DAMAGES.  127 

which  he  applies  to  his  own  use,  though  the  paper  bore  a 
higher  rate.^ 

Money  disbursed  by  a  mortgagee  liears  the  same  rate 
of  interest  as  the  original  loan.^ 

(v)  Money  j)aid  for  the  use  of  another.  Interest  as 
damages  is  allowed  on  money  paid  on  account  of,  or  for 
the  use  and  benefit  of,  or  at  the  request  of  another  from  the 
time  of  payment,^  without  proof  of  a  demand,*  and  at  the 
legal  rate.^  As  Avhere  one  was  compelled  to  pay  damages 
for  injuries  received  by  the  default  of  another  f  also,  on 
costs  and  taxes  when  a  mortgage  is  redeemed,  after  it  has 
been  foreclosed.'' 

Where  a  tenant  in  common  is  obliged  to  pay  and  does 
pay  oif  an  incumbrance,  he  can  recover  interest  at  the 
same  rate  as  he  pays  f  and  interest  on  the  aggregate  of 
principal  and  interest  that  he  has  paid  is  allowed  from 
actual  demand,  or  service  of  writ.^ 

When  the  owner  of  a  building  pays  a  judgment  on  a 
mechanic's  lien,  he  is  entitled  to  interest  on  the  amount 
paid  from  the  date  of  the  judgment. ^^^ 

Where  money  expended  by  a  husband  in  permanent 

'  4  Geo.  (Miss.)   467  (1857). 

2  2  Anstr.  (Eng.)  551  (1795). 

■»  2  P.  &  D.  (Eng.)  408  (1839)  ;  1  Mack.  (D.  C.)  314  (1881)  ;  G3  loAva 
275  (1884)  ;  67  Iowa  654  (1885) ;  1  Adams  (Me.)  574  (1856)  ;  13  Mass. 
218  (1816);  1  Pick.  (Mass.)  118  (1822);  2  Met.  (Mass.)  168  (1840); 
146  Mass.  148  (1888)  ;  1  Mo.  718  (1827)  ;  48  Hun  (N.  Y.)  253  (1888)  ; 
2  N.  &  McC.  (S.  C.)  493  (1820)  ;  7  Ricli.  (S.  C.)  23  (1853)  ;  40  Vt.  35 
ri867)  ;  contra,  solicitor's  bill  of  costs,  5  Jur.  N.  S.  (Eug.)  637  (1859)  ; 
4  DcG.  &  J.  (Eng.)  104  (1859). 

*  2  Met.  (Mass.)  168  (1840). 

*  15  Iowa  181  (1863). 

«  1  Mack.  (D.  C.)  314  (1881). 

^  146  Mass.  148  (1888). 

«  97  111.  237  (1881)  ;   contra,  12  C.  E.  Gr.  (N.  J.)  82  (1876). 

»  4  Ired.  Eq.  (N.  C.)  1  (1845)  ;  46  O.  St.  66  (1888). 

'M3Mo.  App.  369  (1891). 


128  THE    LAW    OF    INTEREST. 

improvements  on  land,  which  is  his  wife's  separate  estate, 
is  charged  on  such  land,  in  an  action  by  a  creditor  of  the 
husband,  interest  will  be  allowed  on  such  money  only  from 
the  commcnccnicnt  of  the  action.^ 

(?r)  Farlilionfi.  Interest  should  be  decreed  on  a  sum 
of  money  assessed  for  equality  of  a  partition. - 

{X)  Penaliies.  Interest  is  not  generally  cliargeablo 
on  penalties,  as  on  the  annual  penalty  for  bastardy,^  un- 
til the  service  of  the  writ.* 

Interest  is  allowed,  however,  where  it  is  necessary  to 
protect  that  which  it  was  given  to  secure.^ 

Equity  will  relieve  against  a  bond  given  for  a  penalty 
sum,  with  contract  for  interest  from  date,  as  it  is  secured 
by  a  penalty,  and  if  it  has  been  paid,  equity  will  cause 
it  to  be  refunded.'' 

(?/)  Policies.  Insurance  companies  cannot  be  com- 
pelled to  pay  interest  on  policies  until  a  loss  is  proved.^ 
If  a  time  is  set  in  the  policy  when  the  amount  due  is  pay- 
able, interest  1)egins  to  run  at  that  time.^  If  no  time  is 
stated,  either  in  life  or  fire  insurance,  interest  is  allowed 
on  the  amount  due  on  demand  after  it  is  payable,^  and  if 
tiiere  has  been  no  demand,  then  from  the  date  of  the  writ.^" 

'  14  S.  E.  Rep.  (W.  Va.)  410  (  1892). 

-  Bail.  Eq.  (S.  C.)  102  (1830). 

3  14  Rich.  (S.  C.)  29  (1866),  177  (1867). 

■»  6  Rand.  (Va.)  101  (1828). 

*55  Pa.  St.  238  (1866). 

«2  Murpli.  (N.  C.)  145  (1812). 

'  1  Hall  (N.  Y.)  247,  261  (1828)  ;  23  Wend.  (N.  Y.)  525  (1840). 

871  Ala.  516  (1882);  10  So.  Rep.  (Fla.)  297  (1891);  80  111.  388 
(1875)  ;   153  Mass.  143  (1891)  ;  10  Mon.  340  (1891)  ;  0  O.  456  (1834). 

9  98  111.  324  (1881)  ;  III  Mass.  93  (1872)  ;  138  Mass.  151  (1884)  ;  153 
Mass.  143  (1891).  From  notice  of  death  in  life  insurance,  says  the 
court  in  129  111.298  (1889).  From  demand,  if  company  -waives  the 
condition  of  payment,  the  court  of  Maryland  (.leckkd  in  the  case  cited 
20  Md.  40  (1862). 

'0  138  Mass.  151  (1884)  ;  64  Mich.  372  (1887). 


INTEREST    ALLOWED   AS    DAMAGES.  129 

Where  there  has  been  a  demand  it  must  be  alleged  in  the 
doclaration.^  If  there  is  an  express  promise  to  pay,  it  is 
allowed  on  the  promise.^ 

If  the  amount  due  on  the  policy  is  unliquidated,  interest 
runs  from  the  beginning  of  the  suit.^ 

Interest  on  the  amount  due  on  an  insurance  policy  should 
be  computed  at  the  legal  rate  of  the  place  of  paj^ment  pro- 
vided for  in  the  policy,  and  not  at  the  place  where  suit  is 
brought  thereon.* 

No  interest  is  allowed  to  an  insurance  company  on  a 
premium  note.^ 

(s)  Bent.  It  has  been  suggested  that  rent  itself  is  in 
the  nature  of  interest,  being  given  for  the  use  of  property, 
and  that  if  interest  were  allowed  upon  it,  it  would  be  like 
enforcing  the  payment  of  compound  interest  when  there 
had  been  no  agreement  for  its  payment.^  This  was  the 
old  view  ;^  but,  later,  the  courts  have  almost  universally 
fijiven  interest  on  rent  in  arrears  from  the  time  it  was  pay- 
able in  money  f'  and  even  if  it  were  payable  otherwise 


1  138  Mass.  151  (1884). 

2  93  III.  271  (1879)  ;  98  111.  324  (1881). 
=>  4  Dall.  (Pa.)  463  (180G). 

*  16  S.  E.  Rep.  (S.  C.)  134  (1892). 

*  37  Barb.  (N.  Y.)  630  (1862> 
«  6  Col.  120  (1881). 

7  10  B.  Mon.    (Ky.)  229  (1850)  ;  2  Call  (Va.)  253  (1800)  ;  3  Hen.  & 
M.  (Va.)  463  (1809);  5  Mimf.  (Va.)  21  (1816). 

«  5  Espi.   (Eng.)  114  (1804) ;    5  Harr.  (Del.)  123  (1848),  204  (1849) 
8Braclw.  (111.)  367  (1880)  ;  10  B.  Mou.   (Ky  )  229  (1850);  6  G.  &  J 
(Md.)  383  (1834)  ;  141  Mass.. 162  (1886)  ;  4  Johns.  (IST.  Y.)  183  (1809) 
7  Wend.  (N.  Y.)  109  (1831) ;  2  Barb.  (N.  Y.)  643  (1818)  ;  12  How.  Pr 
(N.  Y.)  523  (1856)  ;  1  Hun  (N.  Y.)  102  (1874)  ;  58  N.  Y.  323  (1874) 
75  N.  Y.  579  (1878);    6  Binn.  (Pa.)   159  (1813);  4  Whart.  (Pa.)  516 
(1839);  2  Call  (Va.)  249  (1800);  1  Grat.  (Va.)  416  (1845);    use  of  a 
negro,  12  G.  &  J.  (Md.)  288  (1842) ;  rent  of  a  boat,  50  Barb.  (N.  Y.) 
62  (1867). 
9 


130  THE    LAW    OF    INTEUEST. 

th.'iii  in  nioiioy,  but  is  not  so  paid.^  If  the  amount  due  is 
unliquidated,  interest  will  not  be  allowed. - 

Some  courts  allow  interest  on  rent  only  when  it  is 
secured  by  covenant  f  while  others  will  nive  it  for  use  and 
occupation.*  The  South  Carolina  court  will  not  allow  it 
on  a  parol  lease. ^ 

Interest  is  allowed  in  an  action  of  ejectment/'  but  no 
distress,  following  the  general  rule  of  interest,  can  be 
made  for  the  interest  only." 

The  courts  in  Colorado  and  other  places,  holding  the 
view  that  rent  is  a  kind  of  interest,  decide  that,  in  equity-, 
they  may,  in  their  sound  discretion,  impose  interest  upon 
rent  when  a  party  has  been  grossly  delinquent,  or  inten- 
tionally contrary  to  his  duty.^  In  Pennsylvania,  the  jury 
is  generally  allowed  to  give  interest  from  the  time  the  rent 
is  distrained  or  sued  for.^  The  court  in  North  Carolina 
docs  not  usually  allow  interest  until  an  account  is  de- 
manded ;  but  if  the  possession  has  been  inala  fide  it  is 
allowed  from  receipt  of  the  profits. ^*^ 

Interest  is  not  recoverable  by  way  of  damages  in  an 


'  1  Johns.  (N.  Y.)  276  (180G) ;  4  Wend.  (N.  Y.)  313  (1830) ;  5  Denio 
(N.  Y.)  135  (1848)  ;  2  Barb.  (N.  Y.)  643  (1848)  ;  2  Comst.  (N.  Y.)  135 
(1849). 

2  32  S.  C.  57  (1889). 

'■"  3  Dana  (Ky.)  31  (1835) ;  4  Johns.  (N.  Y.)  183  (1809)  ;  6  Binn.  (Pa.) 
159  (1813). 

*  8  (^al.  32  (1857). 

*  1  Strob.  (S.  C.)  250  (1847). 

8  141  Mass.  162  (1886)  ;  contra,  63  Mo.  103  (1876). 

7  6  G  &  J.  (Md.)  383  (1834)  ;  1  Gill  (Md.)  57  (1843)  ;  2  Binn.  (i'a.) 
116  (1809). 

8  6  Col.  120  (1881);  1  Cush.  (Miss.)  308  (1852);  2  Yeates  (Pa.)  72 
(1798) ;  2  Binn.  (Pa.)  146  (1809)  ;  33  Pa.  St.  435  (1859)  ;  5  Uand.  (Va.) 
571  (1827). 

9  4  Yeates  (Pa.)  264  (1805). 

'"  2  Dev.  Eq.  (N.  C.)  67  (1831). 


INTEREST    ALLOWED    AS    DAMAGES.  131 

action  of  debt  for  rent,  says  the  Virginia  court/  which 
allows  it,  however,  on  estimated  rents  and  profits. ^ 

A  lessee  is  only  obliged  to  pay  interest  on  the  rent  that 
falls  due  during  his  tenancy ;  therefore,  an  assignee  of  a 
lease  should  pay  interest  only  subsequent  to  the  convey- 
ance ;'^  and  a  stranger,  whose  tenancy  begins  at  the  expi- 
ration of  a  written  lease,  is  not  chargeable  with  interest 
on  the  rent  in  arrears.* 

(«rt)  Replevin.  Interest  is  allowed  on  the  value  of 
replevied  property  from  the  time  of  the  wrongful  taking.^ 
It  is  also  allowed  on  the  bond  if  the  goods  are  not  re- 
turned,*^ but  not  from  a  time  anterior  to  its  date.^  If  the 
goods  are  returned  after  judgment  interest  from  the  date 
of  the  judgment  to  the  time  of  return  is  allowed,^  in  a  suit 
on  the  bond  for  the  conversion  of  the  goods.  The 
Maryland  court  holds  that  the  question  of  interest  on  a 
replevin  bond  is  exclusively  for  the  jury. ^ 

{hh)  Boyallies.  On  royalties  on  patents,  etc.,  interest 
should  run  from  the  receipt  of  the  proceeds  of  sales,  etc.^*^ 

{cc)  Sales.  Interest  on  the  price  of  goods  sold  will 
run  from  the  day  of  sale  if  the  amount  is  liquidated  ;^^  and 

J  3  II.  &M.  (Va.)  463  (1809). 

2  1  Kob,  (Va.)  196  (1842) ;  26  Grat.  (Va.)  36  (1875)  ;  contra,  5  Leigh 
(Va.)  561  (1834)  ;  6  Leigh  (Va.)  38  (1835). 

3  33  Pa.  St.  435  (1859). 

■»  1  Strob.  (S.  C.)  250  (1847). 

"  54  CaL  192  (1880)  ;  63  Cal.  371  (1883)  ;  8  Nev.  41  (1872). 

•'35  111.  178  (1864). 

^3Munf.  (Va.)  277  (1812). 

«  16  IiKl.  374  (1861)  ;  1  Zab.  (N.  J.)  411  (1848) ;  3  Zab.  (N.  J.)  736 
(1852)  ;  8  Vr.  (N.  J.)  179  (1874). 

9  2  G.  &  J.  (Mel.)  430  (1830). 
"'82N.  Y.  271  (1880). 

"  30  Ala.  721  (1857);  31  Ala.  53  (1857);  36  Ark.  3.55  (1880);  69  111. 
423  (1873);  6  Allen  (Mass.)  221  (1863);  contra,  10  Cusli.  (Mass.)  250 
(1850);  36  Vt.  46  (1863),  unless  there  is  a  custom  among  merchants 
to  charge  interest  in  similar  cases,  and  the  purchaser  knows  of  it. 


132  THE    LAW    OF   INTEREST. 

thi-s  is  true,  if  it  is  a  cash  sale,  although  the  day  of  payment 
is  p()st[)()iiecl  until  a  particular  event  transpires.^  If  credit 
is  ixiven,  interest  will  be  allowed  from  its  expiration.-  If 
the  term  of  credit  is  not  agreed  upon,  then  from  demand.^ 
It'  the  price  is  not  ascertained,  interest  will  be  allowed 
Irom  the  time  it  is.* 

In  Louisiana,  there  is  a  rule  that  interest  cannot  be 
claimetl,  under  the  custom  of  merchants,  when  the  goods 
do  not  ai)pcar  to  have  been  bought  for  the  purpose  of  trade, 
and  the  vendee  is  not  a  merchant."'' 

In  a  sale  on  credit,  if  the  vendor  refuses  to  give  the 
purchaser  possession,  the  purchaser  is  not  compelled  to  pay 
interest  during  the  time  he  is  deprived  of  such  possession.^ 

If  there  are  any  binding  customs  relative  to  the  allow- 
ance of  interest  on  goods  sold  and  delivered  at  the  place 
where  they  are  sold  the  parties  will  be  l)ound  by  them,"  if 
they  know  of  them.^ 

If  it  is  agreed  that  over-due  bills  for  sales  of  goods 
shall  not  bear  interest,  the  seller  cannot  apply  money  paid 
on  account  to  the  satisfaction  of  interest  that  he  has  charged.'' 

'  2G  Ga.  4C5  (1858),  in  -wliicli  case  the  purchaser  was  a  creditor,  and 
agreed  to  paj'  ■when  the  estate  was  settled. 

-  2  B.  &  P.  (Eng.)  337  (1800)  ;  13  East  (Eng.)  98  (1810)  ;  3  Taun. 
(Eng.)  157  (1810)  ;  2  Campb.  (Eng.)  480  (1810)  ;  3  M.  &  W.  (Eng.)  25 
(1837);  6  Dowl.  (Eng.)  1G3  (1837);  Mur.  &  H.  (Eng.)  27-1  (1837);  2 
Port.  (Ala.)  351,  451  (1835)  ;  4  Ilarr.  (Del.)  130  (1844)  ;  3  Kob.  (La.) 
361  (1842)  ;  4  Minn.  528  (18G0)  ;  30  N.  II.  511  (1855)  ;  3  Comst.  (N.  Y.) 
502  (1850);  22  Vt.  191  (1850). 

3  12  Barb.  (N.  Y.)  288  (1851)  ;  11  N.  Y.  (1  Kern.)  97  (1854)  ;  4  Dall. 
(Pa.)  286  (1803)  ;  37  Wis.  149  (1875)  ;  51  Wis.  407  (1881).  The  Louis- 
iana court  holds,  from  judicial  demand.     1  La.  Ann.  424  (1846). 

■•  1  Sc;im.  (III.)  577  (1830). 

"  7  Mart.  (La.)  228  (1819). 

«2  Md.  Ch.  51G  (1850). 

'  Bat.'s  Mart.  &  2d  Ilay'd  (N.  C)  26  (1794). 

"2  Dall.  (Pa.)  193  (1792). 

»  69  Wis.  527  (1887). 


INTEREST   ALLOWED   AS   DAMAGES.  133 

The  following  are  general  rules  of  equity.  If  the  pur- 
chaser has  not  been  in  possession  interest  on  the  price  is 
not  recoverable.^  If  the  purchaser  is  in  possession  of  the 
estate,  receiving  the  rents  and  profits,  he  is  liable  to  pay 
interest  on  the  unpaid  purchase  money ,2  although  he  Avas 
not  to  pay  it  until  a  subsequent  day.^  If  the  purchaser 
has  the  use  of  the  premises,  he  cannot  claim  interest  on 
the  price  paid  if  the  title  fails.*  So,  if  a  vendee  enjoys 
an  estate  and  withholds  the  purchase  money  until  a  dis- 
pute concerning  the  title  is  adjusted  he  is  required  to  pay 
interest.^  Interest  is  not  allowed  to  an  evicted  vendee, 
who  is  not  held  responsible  for  mesne  profits  before  the 
time  of  his  eviction.^ 

A  purchaser  at  a  sherifi''s  sale  is  liable  for  interest  from 
the  day  of  sale  on  so  much  of  his  bid  as  is  applicable  to 
judgments  other  than  his  own.^ 

When  a  sale  is  rescinded,  the  vendee  becomes  entitled 
to  interest  on  what  he  has  paid  from  the  delivery  or  tender 
of  the  property  to  the  vendor.^  Interest  on  a  contract  for 
the  purchase  of  land  runs  from  the  tender  of  the  deed.^ 
Interest  does  not  run  on  the  price,  after  suit  has  been  in- 
stituted against  the  vendee  for  the  premises. ^°  Also,  when 
property  having  an  income  is  sold,  the  vendee  cannot  avoid 

'  2  Pa.  St.  122  (1845). 

2  12  Ves.  (Eng.)  25  (180G)  ;  3  H.  L.  Cas.  (Eng.)  5C5  (1852) ;  16  Mich. 
223  (1867)  ;  20  Ore.  360  (1891)  ;  6  Biun.  (Pa.)  435  (1814)  ;  64  Pa.  St. 
411  (1870);  27  W.  Va.  1  (1885). 

3  12  Ves.  (Eng.)  25  (1806). 

"  16  La.  35  (1840) ;  8  Rob.  (La.)  157  (1844)  ;  9  Rob.  (La.)  458  (1845). 

*  4  Bibb  (Ky.)  273  (1815). 

«  85  Tenn.  26  (1886). 

7  12  S.  C.  600  (1879). 

«  5  La.  57  (1833). 

9  8Kas.  328  (1871). 

i^SLa.  404  (1832). 


l;U  THE    LAW    OF    INTEREST. 

the  pjUMnent  of  interest,  even  Avlicn  lie  has  a  right  to  re- 
(juire  security  against  eviction,  unless  he  makes  a  tender 
or  (U'posit  of  the  i)ric'c.^ 

If,  in  the  case  of  the  purchase  of  proi)orty,  the  vendee 
seeks  to  csca[)c  the  payment  of  interest  on  account  of  tlie 
(lel'ault  of  the  vendor,  he  must  actually  set  asiile  the  pur- 
(  hase  money  and  appropriate  it  for  the  vendor,  and  notify 
him  that  the  money  is  thus  idle.^  So,  if  a  claimant  is  in 
the  possession  of  and  enjoying  a  fund.^ 

Interest  cannot  be  recovered  on  the  connnon  count  for 
goods  sold  and  delivered.'* 

{d(l)  Subscript  tons.  Whether  interest  is  allowed  on 
sub.scri}>tion3  has  not  been  very  generally  discussed. 
Where  a  subscri[)tion  was  made  in  aid  of  a  railroad,  inter- 
est on  it  was  allowed  from  demand,  or  service  of  writ.° 
Again,  Avhere  a  person  made  a  subscription  to  the  capital 
stock  of  a  raih'oad  corporation,  and  failed  to  pay,  he  was 
charged  with  interest  from  the  time  of  his  default,  and  it 
was  further  held  that  he  could  not  compel  the  company  to 
issue  the  stock  until  he  paid  the  interest  as  well  as  the 
principal.*^  Interest  on  a  subscription  for  the  erection  of  a 
l)iiilding  was  allowed  from  the  time  the  nioney  was  ex- 
pended on  account  of  it,  in  an  Illinois  case."  The  court 
in  Maryland  holds  that  interest  on  subscriptions  to  stock 
is  n(>t  recoverable  as  a  matter  of  right. ^ 

(ee)    Taxes.     Interest  is  not  allowed  on  overdue  taxes 

'  1:5  La.  Ann.  500  (1858). 

-  -j:  W.  Va.  1  (1885). 

M9  Mich.  G31  (1883). 

*  2  Bail.  (S.  C.)  173  (1831)  ;  contra,  ILnrp.  (S.  C.)  393  (1824). 

'  .-.3  Mich.  458  (187G). 

«  -.]  Hun  (X.  Y.)  401  (1875)  ;  71  N.  Y.  2'J8  (1877). 

'  !il  111.  535  (1879). 

"55  Mil.  399  (1880). 


INTEREST    ALLOWED    AS    DAMAGES.  135 

at  common  law.^  When  a  tax  sale  is  judicially  pronounced 
to  be  void  a  reasonable  time  should  then  be  given  to  the 
owner  to  pay  the  taxes. - 

If  taxes  are  paid  under  protest,  the  payor  can  recover 
interest  thereon  from  the  date  of  payment ;  but,  if  not  paid 
under  protest,  only  from  demand,  or  the  date  of  the  writ.'' 

(jf )  Trover.  Interest  is  allowed  in  trover  on  the  value 
of  the  chattels  at  the  time  when  converted,*  from  that  time,' 
or  from  demand,  when  a  demand  is  necessary. "^ 

In  England,  it  was  held  in  an  action  in  trover,  for  a 
bill  of  exchange,  that  the  jury  might,  in  their  discretion, 
include  the  amount  of  the  interest  in  the  damao-es, 
although  there  was  no  mention  of  interest  in  the  declara- 
tion and  no  special  damage  alleged.^ 

In  Kentucky,  whether  interest  should  be  allowed  from 
the  time  of  conversion  is  left  to  the  jury .^  But,  in  Georo-ia, 
the  jury  cannot  add  interest  to  the  value  of  the  property 
as  damages,  if  the  property  was  illegally  taken. ^ 

'  65  Ala.  391  (1880)  ;  70  Ga.  11  (1883)  ;  87  Ky.  G05  (1888)  ;  89  Ky.  531 
(1890)  ;  2  Dutch.  (N.  J.)  398  (1857)  ;  18  Vr.  (N.  J.)  75  (18S5)  ;  55  Tex. 
157  (1880),  311  (1881). 

2  8  Neb.  52  (1878). 

34  Met.  (Mass.)  181  (1842). 

"  72  111.  148  (1874)  ;  1  N.  H.  451  (1818)  ;  3  Zab.  (N.  J.)  342  (1852)  ;  2 
Dutch.  (N.  J.)  426  (1857)  ;  3  Dutch.  (N.  J.)  637  (1858)  ;  2  Johns.  (N.  Y.) 
280  (1807)  ;  8  Johns.  (N.  Y.)  446  (1811)  ;  4  Cow.  (N.  Y.)  53  (1825)  ;  7 
Wend.  (N.  Y.)  354  (1831). 

5  73  Ala.  70  (1882)  ;  33  Cal.  117  (1867)  ;  46  Cal.  323  (1873)  ;  35  Kas. 
225  (1886)  ;  1  Met.  (Mass.)  172  (1840)  ;  134  Mass.  453  (1883)  ;  139  Mass. 
593  (1885)  ;  140  Mass.  183  (1885)  ;  142  Mass.  422  (1886)  ;  85  Mo.  443 
(1885)  ;  47  N.  H.  219  (1866)  ;  2  Johns.  (N.  Y.)  280  (1807)  ;  2  W.  Va.  90 
(1867)  ;  68  Wis.  619  (1887). 

«  49  Ga.  434  (1873)  ;  35  111.  455  (1864)  ;  52  111.  249  (1869)  ;  20  N.  H. 
544  (1847). 

^  2  C.  &  P.  (Eug.)  558  (1827). 

«  1  Dana  (Ky.)  400  (1833)  ;  14  W.  P.  D.  Bush  (Ky.)  658  (1879). 

^50Ga.  444  (1873). 


136  THE    LAW   OF    INTEREST. 

An  odd  case  coming  under  this  branch  of  the  hiw  of 
interest  was  that  of  a  ship  carrying  specie.  She  became 
damaged,  and  some  of  the  coin  was  taken  to  pay  for  re- 
pairing the  vessel.  The  court  held,  in  an  action  to  recover 
the  amount  used,  that  interest  upon  it  should  begin  to  run 
when  the  vessel  reached  the  place  to  which  the  specie  was 
consigned.^ 

'  Spraguc  (U.  S.,  D.  C)  51  (1843). 


CHAPTER  IV. 


HOW   INTEREST   IS   BARRED. 


INTEREST  cannot  be  barred  before  it  begins  to  run.  So 
a  release  of  interest  indorsed  upon  a  note  which  was 
never  delivered  to  the  releasee  is  inoperative.^ 

It  is  a  general  rule,  that  if  a  party  is  barred  from  re- 
covering the  principal  of  a  debt,  he  is  equally  barred  from 
recovering  interest  as  damages  on  it,  which  is  an  accessory 
only,  and  must  follow  the  nature  of  the  principal. ^ 

Mere  readiness  to  pay  the  principal  is  not  a  bar  to  the 
recovery  of  interest  upon  it  f  neither  is  the  possession  of 
the  money  with  which  to  pay  it,  if  it  is  not  so  used.* 

If  a  contingent  note,  including  interest  to  a  given  date, 
becomes  due  prior  to  that  time  by  the  happening  of  the 
contingency,  the  maker  may  defend  to  the  extent  of  the 
unearned  interest  included  therein.^ 

But  interest  on  money  secured  by  a  trust  deed,  will 
not  stop  accruing  on  account  of  complications  in  the  title 
to  the  land  caused  by  attempted  foreclosures  of  the  trust 
deed.*^ 

If  the  law  prohibits  the  payment  of  the  principal,  in- 

'  1  Jones  Eq.  (N.  C.)  253  (1854). 

2  8  Scott  N.  R.  (Eng.)  147  (1844)  ;  15  Q.  B.  (Eng.)  297  (1850)  ;  19  L. 
J.,  Q.  B.  (Eng.)  405  (1850). 

^  45  N.  H.  211  (1864)  ;  24  Pa.  St.  310  (1855). 

*  63  Cal.  113  (1883). 

*  9  Iowa  434  (18C0). 
^  52  111.504  (1869). 

(137) 


138  THE    LAW    OF    IXTEREST. 

torcst  Jiccruing  diiriiiu:  the  existence  of  such  proliiljilion  is 
not  dcinandjihle,  and  the  rule  is  the  same  in  courts  of 
cquit}'  as  in  courts  of  hiw.^ 

It  is  no  valid  objection  to  a  recovery  of  interest  l)y  the 
plaintiff  that  he  was  under  a  rule  for  trial  or  non  j^ro-^.- 

AVhcre  the  fact  of  non-payment  is  ascribable  to  mutual 
misapprehension  of  the  parties,  as  where  a  stakeholder 
could  not  discover  from  the  indistinct  direction  of  the 
owner  as  to  whom  the  fund  should  be  paid,  or  to  the  hiches 
of  the  creditor,  interest  does  not  run  from  that  time  till  the 
debt  is  demanded.^ 

Interest  m:iy  be  l)arred  absolutely,  or  it  may  be  only 
suspended  for  a  time. 

{a)  Act  of  creditor.  A  bona  fide  etlbrt  to  tind  the 
creditor  is  evidence  to  go  to  the  jury  on  the  question  of 
barring  interest  due  to  him.''  A  debtor  is  not  obliged  to 
seek  the  creditor  if  he  goes  outside  of  the  realm,  and  by 
so  doiug  prevents  the  payment  of  the  principal  when  it  is 
due.^  This  evidence  may  be  given  to  the  jury  under  the 
plea  of  payment.*'  If  the  creditor  was  in  the  countr\'  when 
the  debt  became  due,  his  subsequent  absence,  without 
leaving  an  agent,  will  not  prevent  interest  from  accruing.^ 

AVhen  a  debtor,  without  fault  on  his  i)art,  is  prevented 
from  paying  the  debt  at  and  after  maturity,  through  the 


»  2  Dall.  (Pa.)  102  (1789). 

-  2  lUnn.  (Pa.)  428  (1810). 

3  1  S.  &R.  (Pa.)  17G  (1814). 

••  24  Pa.  St.  310  (1855). 

*  3  McC.  (S.  C.)  340  (1825);  contra,  9  S.  &  R.  (Pa.)  2C3  (1823), 
•which  liolds  that  contractual  interest  is  not  to  be  abated  because  of 
the  continued  absence  of  tlie  creditor  at  a  distance  from  the  state,  and 
liis  not  having  been  lieard  from  for  many  yeiirs. 

«  1  Root  (Conn.)  178  (1790);  3  McC.  (S.  C.)  340  (1^2.-.);  1  Call 
(Va.)  133  (1797). 

•^Couf.  (N.  C.)  505  (1800). 


HOW   INTEREST    IS    BARRED.  139 

act  of  his  creditor  or  the  law,  interest  should  be  abated 
during  the  time  he  is  so  prevented,  and  this  the  debtor 
should  show  by  affirmative  proof.^ 

(h)  Change  of  legal  rate.  Interest  as  damages  may 
bo  partly  barred  l)y  a  reduction  of  the  legal  rate  by  stat- 
ute while  the  interest  is  running ;  the  old  rate  being  the 
extent  of  damages  to  the  time  when  the  new  rate  goes  in- 
to etfect  after  which  the  new  rate  controls. ^  This  is  also 
true  where  a  contract  allows  "lawful  interest  for  the  time," 
—  the  rate  will  vary  with  the  statute.^  An  agreement 
fixing  the  rate  of  interest  on  future  dealings  between  the 
parties,  terminates  by  the  passage  of  a  law  making  such 
rate  usurious.* 

(c)  Courts'  order.  An  order  to  pay  money  into  court 
stops  interest,^  from  the  time  the  money  is  brought  in.^ 

(cZ)  Garnishee  process  and  inteiyleader .  Interest 
will  not  generally  be  allowed  during  the  pendency  of  a 
trustee  or  garnishee  process  on  a  debt  upon  which  no  in- 
terest is  due  except  as  damages.^  Otherwise,  if  the  pro- 
cess is  void.^  If  the  proceeding  was  legal  originally,  the 
dismissal  of  the  suit  will  not  make  the  garnishee  respon- 
sible for  interest  while  the  action  was  pending.^  For  ex- 
ceptions to  these  rules,  and  a  full  discussion  of  the  subject, 
see  page  56. 


'  2G  Ark.  240  (1870). 

2  42  Cal.  279  (1871)  ;  44  Cal.  366  (1872)  ;  46  Cal,  823  (1873)  ;  G3  Cal. 
503  (1883);  5  Kas.  5G7  (1870);  contra,  4  La.  87  (1832)  ;  12  La.  530 
(1838). 

^  3  Vr.  (N.  J.)  423  (1868). 

"  4  G(iO.  (Miss.)  299  (1857). 

*  9  G.  &  J.  (Mel.)  80  (1837). 

«  2  Bland's  Cli.  (Md.)  333  (1808). 

7  32  Ga.  20  (1861)  ;  5  Allen  (Mass.)  356  (1862). 

8  61  Ga.  106  (1878). 
"  32  Ga.  20  (1861). 


140  THE    LAW    OF   INTEREST. 

Interest  is  not  allowed  on  a  note  diiriiiir  a  contest  to 
determine  to  whom  it  should  be  paid.^ 

(e)  Judgment.  Upon  a  judgment,  generally,  only  the 
legal  rate  is  allowed.*  Thus  a  contract  rate  may  l)e  re- 
duced. 

(/")  XegJigence.  "Where  a  party  has  neglected  to  claim 
interest  until  after  the  settlement  of  a  running  account, 
or  an  award  of  a  committee  has  been  made,^  he  will  not 
be  allowed  such  claim.  So  he  will  not  be  allowed  interest 
if  he  has  been  guilty  of  gross  laches  in  delaying  the  prose- 
cution of  his  claim. ^  "Where  A  mortgaged  some  land  to 
B,  and  subsequently  to  C,  B  entered,  and  afterward  suf- 
fered A,  the  mortgagor,  to  receive  the  profits  for  several 
years,  without  the  payment  of  interest  on  the  mortgage, 
it  was  held  that  the  interest  that  should  have  been  paid 
during  the  time  the  premises  were  thus  occupied  by  the 
mortgagor  should  not  be  charged  on  the  land  against  C.'^ 

So,  if  a  trustee  violates  his  trust,  and  the  oflended  party 
delays  for  many  years  to  bring  his  suit  for  recovery,  in- 
terest will  only  be  allowed  from  the  commencement  of  the 
suit.^ 

{g)  Payment  of  principal.  The  payment  of  the  prin- 
cipal, interest  not  being  claimed  at  the  time  by  the  creditor, 
generally  bars  a  future  recovery  of  it.^ 

'  8  Mart.  N.  S.  (La.)  214  (1829). 

-  20  Fla.  980  (1884)  ;  G5  Ga.  189  (1880)  ;  74  Ga.  4C5  (1885)  ;  Breese 
(III.)  52,  83  (1824);  1  Scam.  (111.)  137  (1834)  ;  27  111.  349  (1802)  ;  28 
111.  201  (18G2)  ;  35  111.  152  (18G4)  ;  45  111.  178  (1867)  ;  79  111.  532  (1875)  ; 
14  O.  St.  3G7  (18G3).  Sec  page  104. 

=•  17  Conn.  377  (1845), 

*  110  U.  S.  174  (1883)  ;  5  Rich.  Eq.  (S.  C.)  31  (1852;. 

*  Tre.  Ch.  (Eng.)  30  (1G91). 
«  22  Ark.  1  (18G0). 

'  14  Cal.  171  (1859)  ;  19  Conn.  529  (1849)  ;  1.32  111.  550  (1890)  ;  2  La. 
518  (1831);  4  Ilubb.  (Me.)  481  (18G1);  4  Puis.  (Me)  572  (1878);  11 
Mass.  217  (1814);  103  Mass.  33  (1SG9)  ;  71  Mich.  118  (18S8)  ;  8  Mo. 


HOW   INTEREST    IS   BARRED.  141 

Where  the  defendant  used  a  county's  money  from  time 
to  time  to  pay  his  own  notes,  and  an  expert  reported 
the  various  sums  due,  but  did  not  include  the  interest,  the 
defendant's  payment  of  those  sums  and  his  release  by  the 
plaintiff,  the  New  Jersey  court  holds,  does  not  estop 
the  county  from  recovering  the  interest.^ 

From  the  fact  that  the  sum  sued  for  is  precisely  the 
amount  of  the  interest,  it  must  not  be  presumed  that  the 
principal,  as  such,  has  been  paid.^ 

Keceiving  the  principal  and  part  of  the  interest  as  so 
much  paid  generally,  and  not  as  payment  of  the  principal 
itself,  does  not  preclude  the  recovery  of  the  rest  of  the 
interest.^ 

One  cannot  be  compelled  to  receive  a  partial  payment 
so  as  to  stop  interest  on  that  part,  yet  if  the  creditor  col- 
lects a  portion  of  the  debt  through  legal  proceedings  he 
cannot  afterward  claim  interest  on  that  part  from  the  time 
it  Avas  paid  by  the  debtor.*  See  the  law  relating  to  partial 
payments  in  chapter  seven,  at  page  167. 

Contractual  interest  may,  under  peculiar  circumstances, 
be  recovered  after  the  payment  of  the  principal.^  Where 
the  maker  of  a  note,  bearing  contractual  interest  overdue, 


41  (1843)  ;  3  Johns.  (N.  Y.)  229  (1808),  587  (1818)  ;  5  Johns.  (N.  Y.) 
268  (1810)  ;  3  Cow.  (N.  Y.)  86  (1824);  15  AVend.  (N.  Y.)  76  (1835)  ; 
3  Edw.  (N.  Y.)  512  (1841)  ;  11  Paige's  Ch.  (N.  Y.)  142  (1844)  ;  4  Hun 
(N,  Y.)  429  (1875)  ;  119  N.  Y.  1  (1890)  ;  95  N.  C.  245  (188G)  ;  22  Vt.  437 
(1850)  ;  26  Vt.  624  (1854)  ;  56  Vt.  609  (1884)  ;  contra,  3  P.  W.  (Eng.)  126 
(1731)  ;  32  lud.  328  (1869),  overruling  8  Blf.  (Ind.)  328  (1846)  ;  56  Ind. 
288  (1877). 

1  7  N.  J.  L.  J.  148. 

2  5  Cow.  (N.  Y.)  331  (1826). 

3  13  Wend.  (N.  Y.)  639  (1835). 

"  7  Johns.  Ch.  (N.  Y.)  7  (1823)  ;  3  Paige  (N.  Y.)  400  (1832)  ;  7  How. 
Pr.  (N.  Y.)  44  (1852). 

^  15  Wend.  (N.  Y.)  76  (1835). 


142  THE    LAW    OF    INTEREST. 

gave  the  Jioltler  a  iieu'  note  for  the  amount  of  the  principal, 
the  question  of  interest  being  left  open,  it  was  held,  that 
under  those  circumstances,  the  interest  could  be  sued  for 
alone. ^  Also,  where  the  maker  of  a  note  paid  its  principal 
and  promised  to  pay  the  interest  at  a  future  day,  the 
holder  giving  him  the  note  for  a  particuhir  pur[)()se,  it  was 
simihirly  held.^ 

(h)  Slatute  of  limitations.  Interest  may  also  Ijc  l)arrcd 
by  the  statute  of  limitations.  See  chapter  twelve  for  the 
law  concerning  the  effect  of  the  statute  of  limitations  upon 
interest. 

(?)  Tender.  AViien  the  exact  amount  in  cash  of  the 
sum  due  is  tendered  to  the  creditor  (not  to  his  attorney 
at  law^),  and  he  refuses  to  receive  it,  the  interest  ceases.* 
If  the  del)t  is  payable  in  chattels,  they  must  be  tendered.^ 
The  tender  must  be  unconditional.'''  It  must  be  a  real 
tender  at  the  place  and  time  agreed,  and  not  simply  pro- 
posals to  deduct  on  an  account,^  nor  an  appropriation  by 
setting  the  money  aside  and  telling  the  creditor  what  has 


'  5  Scott  (Eng.)  230  (1837)  ;  4  Bing.  N.  C.  (Eng.)  9  (1837)  ;  3 
Hodges  (Eng.)  247  (1837);  IJur.  (Eng.)  799  (1837);  135  Mass.  573 
(1883). 

■  2  Col.  711  (1875). 

3  GLa.  17  (1833). 

*  1  Ch.  Cas.  (Eng.)  29  (1663)  ;  2  Vcs.  (Eng.)  678  (1795)  ;  3  Campb. 
(Eng.)  296  (1812)  ;  67  Ala.  310  (1880)  ;  39  Cal.  61  (1871)  ;  41  Cal.  133 
(1871)  ;  9  Col.  38  (1885)  ;  35  Ga.  8  (1866)  ;  86  111.  470  (1877)  ;  96  III.  1 1 
(1880)  ;  5  Kas.  649  (1864)  ;  6  La.  17  (1833)  ;  42  Md.  192  (1874)  ;  6  Pi^k. 
(Mass.)  106  (1827)  ;  37  Mich.  158  (1877)  ;  56  Mich.  332  (1885)  ;  57  Miss. 
410  (1879)  ;  3  Binn.  (Pa.)  295  (1811)  ;  47  Pa.  St.  353  (1864)  ;  SO  Pa.  St. 
IIG  (1875);  108  Pa.  St.  55  (1884);  on  taxes,  39  Iowa  151  (1874) ;  37 
Kas.  663  (1887). 

*  39  N.  Y.  481  (1868). 

8  9  Col.  38  (1885);  17  Fla.  575  (1880);  1  l)uv.  (Ky.)  304  (1864);  3 
Jones  Eq.  (N.  C.)  126  (1856). 

'  2  Yes.  (Eiig.)  678  (1795)  ;  72  lud.  507  (1880)  ;  47  Pa.  St.  76  (1864). 


now    INTEREST    IS    BARRED.  143 

been  done,^  nor  a  mere  statement  that  the  debtor  is  ready 
to  pay.-  Nor  will  a  real  tender  stop  interest  if  the  person 
maidng  it  has  the  use  and  benefit  of  the  money  from  and 
after  the  time  when  it  was  made  ;"  it  must  be  continuing. 
The  tenderer  must  also  show  that  he  had  the  right  to  make 
tiie  tender  ;*  but  even  then  a  mortgagee  is  not  obliged  to 
accept  a  tender  from  the  holder  of  but  a  moiety  of  the 
equity  of  redemption,  and  when  such  a  tender  is  refused 
the  interest  on  the  debt  does  not  stop.^ 

A  tender  stops  interest  until  the  creditor  asks  for  the 
money  and  no  longer,  if  the  debtor  is  not  then  ready  and 
does  not  again  tender  it.*^  The  amount  tendered  must  be 
kept  in  readiness  and  paid  into  court  if  the  tender  is 
pleaded,  according  to  the  decisions  in  New  Jersey.^ 

If  payment,  or  tender,  is  prevented  by  the  act  of  the 
creditor,  he  is  not  entitled  to  interest.^ 

But  a  tender  does  not  stop  interest  on  a  note  secured 
by  a  trust  deed,  where  the  debtor,  after  the  tender,  assails 
the  validity  of  the  claim  and  seeks  to  have  the  deed  can- 
celled as  a  nullity.'' 

A  refusal  by  the  husband  of  a  legatee,  at  common  law, 
to  receive  a  legacy  stops  interest  on  it.^*' 

Where  money  is  lent  to  be  paid  on  a  certain  day,  with 

»  3-t  L.  R.,  Cli.  Div.  (Eng.)  38G  (188G). 

«  71  Io-\va648  (1887). 

=»  2  P.  Win.  (Eng.)  378  (1726)  ;  62  Ga.  596  (1874)  ;  84  111.  470  (1877)  ; 
96  111.  11  (1880)  ;  1  Duv.  (Ky.)  304  (1864)  ;  3  Spauld.  (Me.)  365  (1882)  ; 
II  Moil.  53  (1891). 

•*  139  Mass.  348  (1885). 

5  3  Spauld.  (Me.)  3C5  (1882). 

6  86  III.  470  (1877)  ;  42  Md.  192  (1874). 

'  1  McCart.  (N.  J.)  168  (1861)  ;    7  C.  E.  Gr.  (N.  J.)  56,  447  (1871)  ; 
8C.  E.  Gr.  (N.  J.)  509  (1872). 
«  1  Mar.  (Ky.)  159  (1818). 
9  60  Miss.  496  (1882). 
w  4  Call  (Va.)  605  (1803). 


144  THE    LAW    OF    INTEREST. 

interest  payable  at  stated  periods,  the  borrower  cannot, 
by  tendering  the  principal  before  the  date  it  is  due  stop 
the  interest,  for  the  time  of  payment  is  part  of  the  con- 
tract, and  for  the  benefit  of  l)otii  parties.^ 

In  a  certain  case,  the  defendant  was  able,  ready  and 
■willing  to  pay  a  note  ever  after  it  matnred,  with  interest 
to  the  time  of  its  maturity,  and  he  had  repeatedly  ollered 
to  pay  the  amount  due,  to  the  proper  person,  upon  tlio 
delivery  to  him  of  the  note  to  be  cancelled  and  the  nioit- 
gage  to  be  discharged,  or  a  sufficient  indenniity  against 
any  claim  on  account  of  said  note  and  mortgage.  The 
l^laintitf  could  not  surrender  the  note  and  mortgage, 
and  it  was  held  in  equity  that  the  defendant  should  not 
suffer  from  that,  and,  although  it  was  not  a  lawful  tender, 
yet  it  Avas  sufficient  to  relieve  the  defendant  from  the 
payment  of  interest  after  such  offer.^ 

In  actions  of  tort  the  plaintiff  is  generally  not  entitled 
to  interest  on  his  damages,  when  he  refused,  before  suit, 
to  accept  for  damages  a  sum  larger  than  he  was  entitled  to, 
although  no  formal  tender  was  made,  the  plaintiff  by  his 
suit  putting  off  payment.^  So,  it  was  held  in  a  Wisconsin 
case  that  interest  was  not  recoverable  on  the  balance  of  a 
disi)uted  account  found  due  to  the  plaintiff,  where  the  de- 
fendant had  previously  offered  to  pay  the  amount  so  found 
due,  wdiich  oiler  had  been  refused.* 

In  Massachusetts,  it  is  held  that  a  tender  will  stop  con- 
ventional interest  only  above  the  legal  rate.^ 

(J)  TFfti'rer.  Parties  may  at  any  time  waive  the  in- 
terest portion  of  a  debt;  but  indulgence  to  the  maker  by 

'  7  Johns.  Ch.  (N.  Y.)  7  (1823). 
■   55  N.  II.  47G  (1875). 
3  58  N.  II.  52-1  (1879). 
^  21  Wis.  27  (18CG). 
^  139  Mass.  407  (1885). 


HOW   INTEREST   IS   BARRED.  145 

extending  the  time  of  payment  of  a  note  is  not  a  waiver 
of  interest  npon  it.^ 

(k)  War.  The  mere  circumstance  of  war  existing  be- 
tween two  powers  or  nations  is  not  a  sufficient  reason  for 
a])ating  interest  on  debts  due  from  subjects  of  one  bellig- 
erent power  to  those  of  another  ;2  but  a  prohibition  of 
all  intercourse  with  an  enemy  during  war,^  rather  than 
the  fact  that  the  money  could  not  be  profitably  used  be- 
cause of  the  condition  of  the  country,*  furnishes  a  sound 
reason  for  the  suspension  of  interest  until  the  return  of 
peace,  and,  therefore,  as  a  rule,  interest  does  not  run 
durinsj  a  formal  war.^ 

The  war  of  the  Revolution  began  September  10,  1775, 
and  ended  March  10,  1783.^  The  civil  rebellion  in  the 
United  States  commenced  July  13,  1861,  and  terminated 
May  10,  1865  J 

To  stop  interest,  the  parties  must  not  only  be  enemies 
to  each  other,  but  be  resident  in  their  respective  countries 
or  states.^  So  interest  on  debts  due  from  citizens  of  Texas 
to  citizens  of  New  York  was  not  suspended  during  the 

'  2iTenn.  406  (1844). 

2  2  H.  &  McH.  (Md.)  ICl  (1798). 

^  1  Pet.  (U.  S.,  C.  C.)  496  (1818);  15  Wall.  (U.  S.)  177  (1872);  62 
Ala.  58  (1878)  ;  11  Bush  (Ky.)  208  (1874)  ;  Coxe  (N.  J.)  433,  435  (1793)  ; 
4  Ilalst.  (N.  J.)  3  (1827) ;  2Dall.  (Pa.)  102  (1789),  132  (1791)  ;  1  Desau. 
(S.  C.)  427  (1795);  3  McC.  (S.  C.)  340  (1825);  20  Grat.  (Va.)  124 
(1870).  This  applies  to  contractual  interest  as  well  as  to  interest 
allowed  as  damages.      15  Wall.  (U.  S.)  177  (1872). 

*  22  W.  Va.  474  (1883). 

*  37  Ga.  482  (18G7)  ;  3  11.  &  M'H.  (Md.)  20  (1790),  140,  167  (1793)  ; 
2  Bl.  Ch.  (Md.)  22hi.  (1803),  645??.  (1795);  2  Dall.  (Pa.)  132  (1791); 
60  Tenu.  695  (1871)  ;  68  Tenn.  325  (1873)  ;  3  Call  (Va.)  22  (1801)  ;  78 
Va.  12  (1883),  6G5  (1884). 

6  2  Dall.  (Pa.)  102  (1789). 
'  37  Ga.  482  (1867). 

827  Grat.  (Va.)  511,  541  (1876)  ;  28  Grat.  (Va.)  207  (1877)  ;  29  Grat. 
(Va.)  379  (1877). 
10 


14G  THE    LAW    OF    INTEREST. 

l;ite  rcl)ollit)U  ;^  that  is,  interest  is  not  l)iirretl  as  l)et\veen 
citizens  of,  and  residents  in,  the  same  country. ^  As  between 
citizens  of  a  belligerent  country  and  those  of  a  neutral 
interest  will  run  as  though  the  war  did  not  exist  if  a  re- 
mittance can  l)e  safely  made.^ 

Even  then  if  the  creditor  has  an  agent,  authorized  to 
receive  payment,  living  in  the  same  jurisdiction  as  the 
deI)tor  interest  ought  not  to  abate,  if  the  del)tor  knows  of 
his  presence.^  So,  where  the  defendant  has  an  agent  in 
the  plaintifi''s  country  and  payments  have  l)een  made  on  the 
principal  by  him  during  the  war.''  Where  a  contract  to 
l)ay  money  was  made  with  an  alien  enemy  before  the  war, 
and  the  enemy  carried  the  contract  to  his  own  country, 
the  obligor,  not  being  able  therefore  to  pay  it,  is  relieved 
from  l)aying  interest  on  it  during  the  war.^  As  between 
an  agent  and  his  principal,  when  the  agent  resides  within 
the  enemy's  lines  he  should  not  be  charged  with  interest 
during  the  war.^  The  same  principle  applies  in  cases 
where  a  surety  of  the  enemy  resides  within  the  creditor's 
country.^ 

War  does  not  disturb  contractual  interest,,  if  it  is  not 
due  until  the  war  is  over.^ 

This  defence  to  the  payment  of  interest  is  personal  to 
the  del)tor,  and  is  not  available  by  a  surety. ^'^ 

'32  Tex.  CG3  (1870). 

237  Ark.  463  (1881);  32  Grat.  (Vti.)  G13  (1880). 

34  Dall.  (Pa.)  28G  (1803).  This  was  the  case  of  a  debt  contracted 
before  the  Revohitiou  by  citizens  of  Peuusylvania  and  Holland.  The 
debtor  Avas  held  liable  for  interest. 

*3  Wash.  (U.  S.,  C.  C.)  390  (1818);  7  Wall.  (U.  S.)  447  (1808). 
The  court  in  2  Dall.  (Pa.)  102  (1789)  said  that  interest,  even  tlion, 
should  not  be  alUnved,  as  all  intercourse  with  the  enemy  is  ])roliibitcd. 

=  1  Desau.  (S.  C.)  194  (1791). 

63  McC.  (S.  C.)340  (1825). 

7  20  Grat.  (Va.)  188  (1875). 

«4  II.  &  M'll.  (Md.)  101  (1798). 

9  15  Minn.  410  (1870). 

'"  02  Ala.  58  (1878). 


CHAPTER  V. 


RATE  OF  INTEREST. 


rp HERE  are  two  classes  of  rates  per  cent  of  interest,  the 
-L  legal  and  the  conventional  rate.'  The  law  regards  a 
person  as  always  bound  to  pay  the  legal  rate  unless  there 
is  an  agreement  for  another.^  Under  this  rule  there  is  a 
diversity  of  opinion  on  this  question  :  Where  a  contract  is 
made  "with  interest  at  ten  per  cent"  in  a  state  where  the 
legal  rate  is  six  per  cent,  will  the  contract  carry  ten  per 
cent  after  maturity  until  it  is  paid,  or  only  the  le^-al  rate? 
The  decisions  are  about  evenly  divided.  Those  courts 
which  hold  that  it  will  draw  the  conventional  rate  after 
maturity  say  that  that  was  the  presumed  intention  of  the 
parties.^     The  other  courts  hold  that  the   agreement  of 

'  The  Spanish  law  recognizes  the  same  divisions.    2  Cal.  568  (1852). 

29  Col.  228  (188G)  ;  15  Col.  320  (1890)  ;  1  Scam.  (111.)  305  (1836)  ;  49 
111.  142  (1868)  ;  57  lU.  327  (1870)  ;  1  Bradw.  (111.)  555  (1878)  ;  123  111. 
608  (1888);  39  Kas.  73  (1888);  1  Mart.  (La.)  75  (1809);  14  La.  Ann. 
681  (1859)  ;  63  Md.  484  (1885). 

38  Exch.  (Eng.)  620  (1853);  3  C.  B.,  N.  S.  (Eng.)  144  (1857);  27 
L.  J.,  C.  P.  (Eng.)  88  (1857);  97  U.  S.  51  (1877);  103  U.  S.  697 
(1880)  ;  2  Cal.  597  (1852)  ;  29  Conn.  268  (1860)  ;  33  Conn.  419  (1866)  ; 
20  Fla.  980  (1884) ;  86  Ga.  1  (1890)  ;  14  S.  E.  Rep.  (Ga.)  118  (1891)  ;' 
28  111.  201  (1862)  ;  110  111.  35  (1884)  ;  17  Bradw.  (111.)  491  (1885)  ;  116 
111.  391  (1886)  ;  94  Ind.  178  (1883)  ;  101  Ind.  1  (1884)  ;  18  Iowa  324 
(1865)  ;  20  Iowa  490  (1866)  ;  112  Mass.  63  (1873)  ;  129  Mnss.  82,  425, 
559  (1880) ;  139  Mass.  360  (1885)  ;  38  Mich.  662  (1878)  ;  2  Minn.  350 
(1858);  60  Miss.  400,  496  (1882);  64  Mo.  600  (1877);  8  Mo.  App.  76 
(1879);  9  Mo.  App.  575,  581  (1881);  79  Mo.  226  (1883);  81  Mo.  636 
(1884) ;  84  Mo.  GG  (1884)  ;  3  Mon.  412  (1879)  ;  15  Neb.  256  (1883)  ;  16 
Neb.  12  (1884)  ;  17  Neb.  491  (1885)  ;   1  Nev.  161  (1865)  ;  12  Vr.  (N.' J.) 

(147) 


148  THE    LAW    OF    INTEREST. 

the  parties  is  limited  to  the  time  meiitioiied  in  the  con- 
triict.^  But  if  one  voluntarily  continues  to  pay  the  con- 
ventional rate  after  the  maturity  of  the  contract  he  cannot, 
in  the  absence  of  fraud,  have  the  excess  above  the  legal 
rate  deducted  from  the  principal  on  settlement.-  Neither 
will  the  mere  payment  of  the  rate  agreed  upon  after  the 
maturity  of  the  debt  iix  the  rate  after  maturity  ;  as,  where 
the  rate  is  not  stated  and  a  greater  than  the  legal  rate  has 

349  (1879);  4  Johns.  Cb.  (N.  Y.)  436  (1820);  19  Hun  (N.  Y.)  87 
(1879)  ;  CO  How.  Pr.  (N.  Y.)  9  (1880)  ;  25  0.  St.  384,  G21  (1874)  ;  G5  Tenn. 
7G2  (1872) ;  7  Tex.  4G1  (1852) ;  10  Tex. 189  (1853) ;  IG  Wis. 178  (18G2) ; 
18  "Wis.  3G7  (18G4).  In  Massacluisetts,  it  is  held  that,  after  a  tender 
of  the  amount  due  on  a  matured  debt  bearing  interest  at  a  conven- 
tional rate  higher  than  the  legal,  only  the  legal  rate  can  be  recovered. 
139  Mass  407  (1885).  So,  where  a  mortgagor's  interest  in  land  was 
sold  on  execution,  the  purchaser  told  the  agent  of  the  mortgagee  that 
he  wished  to  pay  the  mortgage,  and  the  agent  misled  him.  The 
mortgagee  was  held  to  be  estopped  from  claiming  the  rate  of  interest 
named  in  the  mortgage  after  the  maturity  of  the  debt,  and  was  al- 
lowed only  the  legal  rate.  137  Mass.  389  (1884).  The  court  in  New 
York,  in  10  Hun  (N.  Y.)  173  (1877),  held,  that  if  the  agreed  rate  was 
less  than  the  legal  it  would  continue  till  judgment. 

'  22  How.  (U.  S.)  118  (1859)  ;  22  Wall.  (U.  S.)  170  (1874)  ;  100  U.  S. 
72  (1879);  108  (U.S.)  143  (1882);  7  Ala.  490  (1845);  14  Ahi.  233 
(IS48);  4  Ark.  124  (1842);  31  Ark.  G26  (1876);  32  Ark.  154,  571,  G12 
(1877);  36  Ark.  476  (1880);  42  Ark.  539  (1884);  54  Ark.  437  (1891); 
42  Conn.  570  (1875);  68  Ind.  202  (1879);  71  Ind.  171  (1880);  72  Ind. 
567  (1880)  ;  74  Ind.  158  (1881)  ;  2  Kas.  184  (1863)  ;  3  Kas.  515  (1866)  ; 
7  J  .T.  Mar.  (Ky.)  619  (1832);  13  W.  P.  D.  Bush  (Ky.)  121  (1877); 
3  Mart.  N.  S.  (La.)  185  (1824) ;  3  Puis.  (Me.)  145,  540  (1877)  ;  3  Haml. 
(Me.)  72  (1890)  ;  15  Minn.  416  (1870)  ;  94  N.  Y.  354  (1884)  ;  113  N.  Y. 
485  (1889)  ;  15  O.  St.  218  (1864)  ;  5  W.  &  S.  (Pa.)  51  (1842)  ;  10  R.  I. 
223  (1872)  ;  1  N.  &  McC  (S.  C.)  67  (1818)  ;  10  S.  C.  133  (1878)  ;  16  S. 
C.  469  (1881);  30  S.  C.  61  (1888);  33  S.  C.  210  (1890);  35  S.  C  61 
(1891);  14  S.  E.  Rep.  (S.  C.)  809  (1892);  1  Utah  63  (1871):  19  Wis. 
533  (1865).  The  court,  in  43  L.  J.,  Ch.  (Eng.)  855  (1874)  and  7  L.  R., 
II.  L.  (Eng.)  27  (1874),  says  that  the  conventional  rate  in  England  is 
not  allowed  after  tlie  maturity  of  the  contract,  and  that  the  court  may 
then  award  -wliat  they  deem  just  and  roiisouable,  Avhich  is  generally 
the  agreed  rate. 

23  Haml.  (Me.)  72  (1890). 


RATE    OF   INTEREST.  149 

been  paid  after  the  maturity  of  a  note,  the  creditor  cannot 
recover  more  than  the  legal  rate  ;^  it  does  not  amount  to  an 
agreement  to  pay  other  than  the  legal  rate. 

A  contract,  bearing  a  conventional  rate  of  interest,  pay- 
able on  demand,  is  a  contract  that  stipuhites  what  shall  be 
paid  after  maturity,  as  the  note  is  due  as  soon  as  made.^ 
So,  if  payable  one  day  after  date,^  where  it  specifies  the 
rate  of  interest  for  a  longer  time  simply.*  If  the  contract 
says  that  the  agreed  rate  shall  govern  "  until  the  princi- 
pal sum  be  paid  "  the  contract  rate  must  be  paid  accord- 
ingly, although  after  maturity  f  and  it  matters  not  what 
the  form  of  the  contract  is,  the  interest  beins:  re2:arded  in 
such  cases  as  agreed  damages,  and  not  technical  interest.^ 
The  courts  in  ]Montana  and  Ohio  hold  that  the  words  "until 
paid,"  wdien  the  time  of  payment  is  stated,  are  limited 
to  the  time  named,  after  which  only  the  legal  rate  is  al- 
lowed .^ 

Parties  may  agree  Avhat  per  cent  their  contracts  shall 
bear  after  maturity ;  ^  and  the  Missouri  court  has  decided 
that  a  note  bearing  ten  per  cent  interest,  stipulating  that 
if  it  is  not  paid  at  maturity  it  shall  bear  nine  per  cent  for 
a  certain  length  of  time,  shall  bear  the  original  rate  after 

U38  Mass.  53  (1884).  This  may  be  due,  partly,  to  a  statute  in 
Massacliusetts,  wliicli  provides  that  contracts  for  a  greater  than  the 
legal  rate  shall  be  in  writing. 

2  4  Puis.  (Me.)  80,  524  (1878) ;  153  Mass.  550  (1891). 

=•31  Ark.  (120  (1876)  ;  38  Ark.  114  (1881)  ;  40  Ark.  117  (1882)  ;  18  S. 
W.  Rep.  (Ky.)  637  (1892)  ;  14  S.  C.  341  (1880)  ;  22  S.  C.  139  (1884). 

*  14  S.  C.  341  (1880)  ;  22  S.  C.  139  (1884). 

*  133  U.  S.  626  (1889)  ;  4  Ark.  170,  199  (1842)  ;  2  Col.  70  (1873)  ;  6 
Col.  587  (1883)  ;  84  Ind.  370  (1882)  ;  148  Mass.  231  (1889)  ;  149  Mass. 
73  (1889)  ;  10  R.  I.  299  (1872). 

«1  Mon.  499  (1872). 

'  1  ftlon.  612  (1872)  ;  7  O.  1  (p.  80)  (1835). 

«  83  111.  226  (1876).  Unless  the  court  deems  it  too  much.  2  Col.  70 
(1873). 


150  THE    LAW    OF    INTEREST. 

the  specified  period  had  expired.^  In  those  cases  where 
compound  interest  is  allowed,  the  parties  can  agree  at 
what  rate  interest  payable  at  stated  times  shall  bear  in 
tercst  after  it  has  become  due.-  The  Nel)raska  court  holds 
that  an  agreed  rate  of  interest  after  maturity  is  a  penalty, 
whJLh  it  will  not  enforce.^ 

Judgments  and  decrees  generally  bear  the  legal  rate, 
and  not  the  rate  named  in  the  contracts  upon  which  the 
suits  are  brought."*  Where  notes  bearing  seven  per  cent 
interest  are  merged  in  a  judgment,  which  bears  only  the 
leiral  rate,  a  mortiraj^e  sccurinij  the  notes  should  l^e  after- 
Avard  reckoned  in  equity  as  bearing  the  judgment  rate 
only.^  For  a  fuller  discussion  of  the  rate  of  interest  on 
jutlgments,  see  judgments  in  chapter  three,  at  page  104. 

A  decree  by  the  Missouri  court,  establishing  the  lien  of 
a  judgment  creditor  upon  land  fraudulently  conveyed  by 
his  debtor,  allowed  interest  upon  the  original  judgment 
I'rom  its  date,  at  the  rate  therein  specified.'^ 

"Where  the  holder  of  a  note  which  is  barred  by  the  stat- 
ute of  limitations  agreed  to  take  less  than  its  face  value  by 
writing  on  its  face,  it  was  held  to  be  a  new  contract,  and 
henceforth  to  bear  only  the  legal  rate  of  interest.^  But 
where  a  note  thus  barred  is  revived  by  a  new  promise, 
the  legal  conventional  rate  is  presumed  to  continue.^ 


'  66  Mo.  453  (1877). 

M6  Iowa  239  (1877). 

3 51  N.  W.  Rep.  (Neb.)  753  (1892). 

*  2  Beas.  (N.  J.)  289  (1861)  ;  19  Hun  (N.  Y.)  87  (1879) ;  60  How.  Pr. 
(N.  Y.)  9  (1880)  ;  84  N.  Y.  471  (1881)  ;  14  O.  St.  367  (1863)  ;  16  S.  C.  15, 
469  (1881);  1  Wash.  T.  112  (1860);  contra,  contractual  interest,  14 
Mo.  App.  187  (1883)  ;  25  0.  St.  622  (1874)  ;  24  AY.  Va.  344  (1884). 

n4  0.  St.  367  (1863). 

675  Mo.  460(1882). 

7  132  111.  627  (1890). 

«  83  Ga.  166  (1891). 


RATE    OF    INTEREST.  151 

III  an  action  on  an  indemnity  bond  given  to  an  officer 
upon  making  a  levy,  tlie  property  being  sold,  the  dam- 
ages and  the  judgment  thereon  were  decided  by  the  Iowa 
court  to  bear  interest  at  the  rate  of  the  note  which  the  prop- 
erty secured.^ 

Attorney's  fees  stipulated  for  in  a  mortgage  will  bear 
the  same  rate  of  interest  as  the  judgment  on  it.- 

There  is  nothing  to  prevent  parties  to  a  note  from  al- 
lowing back  interest  upon  the  debt  at  the  same  rate  that 
would  be  lawful  for  the  future.^     It  will  not  be  usurious. 

If  the  holder  of  collateral  paper,  bearing  eight  per  cent 
interest,  collects  and  appropriates  the  same  to  his  own 
use,  he  will  be  liable  at  only  the  legal  rate  from  that 
time.* 

Where  interest  as  damages  is  allowed  for  the  non-pay- 
ment of  contractual  interest,  only  the  legal  rate  will  be 
given.^ 

In  New  Mexico,  in  an  action  on  a  note,  interest  at  the 
legal  rate  only  can  be  recovered  on  the  common  counts, 
though  the  note  bears  a  higher  rate  by  its  terms. ^ 

I.    THE    LEGAL   RATE. 

The  terms  "legal  interest"  and  "legal  rate,"  as  used  in 
the  reports,  are  identical.^  The  legal  rate  is  that  rate  per 
cent  established  by  law,  either  by  constitution,  statute  or 
custom,  for  which  all  parties  are  conclusively  presumed  to 

'  66  Iowa  731  (1885). 
"llKas.  381  (1873). 
3  39  Mich.  417  (1878). 
MGeo.  (Miss.)  467  (1857). 

*  32  N.  E.  Rep.  (N.  Y.)  129  (1892)  ;  26  0.  St.  59  (1875)  ;  contra,  69 
N.  C.  89  (1873). 
6  3N.  M.  45(1883). 
735  Cal.  624  (1868). 


152  THE    LAW    OF    INTEREST. 

have  contracted  in  absence  of  an  agreed  rate,^  and  which 
is  also  allowed  as  damages.^  In  Louisiana,  the  early  us- 
ual rate  was  that  generally  allowed  at  Xew  Orleans  and 
Bordeaux.^  Six  per  cent  is  now  the  legal  rate  in  a  ma- 
jority of  the  states,  and  iu  other  places  it  varies  from  Civq 
to  twelve  per  cent.  In  about  one-third  of  the  states  par- 
ties can  legally  contract  for  any  other  rate,  unless  it  is  so 
high  that  it  is  miconscional)le.  In  most  of  the  states, 
however,  the  legislatures  have  fixed  a  maximum  limit, 
beyond  which  parties  cannot  legally  contract ;  and  if  they 
attempt  to  do  so  they  are  guilty  of  usury,  and  tlic  con- 
tract cannot  be  enforced  as  made,  if  at  all.  See  chapters 
on  usury  and  the  statutes,  numbers  ten  and  thirteen. 

If  the  rate  is  not  fixed  by  the  parties,  or  by  statute,  it 
is  to  be  regulated  by  the  custom  of  the  place  where  the 
contract  is  to  be  performed,  found  by  a  jury  ;'  or,  the 
jury  may  establish  it  for  that  case  ;^  or,  the  court  may 
allow  a  reasonable  rate.® 

Coupons  do  not  bear  the  rate  named  in  the  bond  unless 
it  is  so  stated;^  damages,^  judgments  for  debts,  decrees,^ 

1  9  Col.  228  (1886)  ;  15  Col.  320  (1890)  ;  112  Mass.  24-t  (1873)  ;  Pen. 
(N.  J.)  907  (1811);  1  Ilalst.  (N.  J.)  115  (1822)  ;  4  Halst.  (N".  J.)  264 
(1827)  ;  12  Vr.  (N.  J.)  349  (1879)  ;  17  Stew.  (N.  J.)  56  (1888)  ;  15  0. 
St.  40  (1864). 

2  94  X.  Y.  641  (1884)  ;  95  N.  Y.  428  (1884)  ;  9  Ore.  266  (1881). 

3  1  Mart.  (La.)  71  (1809). 

*  1  Wash.  (U.  S.,  C.  C.)  521  (1806)  ;  15  Wall.  (U.  S.)  562  (1872)  ;  Mi- 
nor (Ala.)  387  (1825)  ;  1  Stew.  &  Port.  (Ala.)  33  (1831).  The  court 
iu  Arkansas  says  that  it  cannot  be  simply  the  custom  of  merchants. 
18  Ark.  456  (1857). 

*  1  Utah  55  (1871). 

«  8  Port.  (Ala.)  250  (1839) ;  1  Cal.  422  (1851).  In  the  latter  case  the 
court  allowed  six  per  cent  as  a  reasonable  rate,  because  it  was  be- 
lieved to  have  been  the  legal  rate  of  interest  of  the  Mexican  republic 
at  the  time  of  the  organization  of  the  state  government  of  California. 

^  1  Dill.  (U.  S.,  C.  C.)  529  (1870) ;  39  Minn.  122  (1888). 

8  L'l  Iowa  326  (1866). 

»  3  Blf.  (Ind.)  457  (1834). 


RATE    OF    INTEREST.  153 


and  jiidgmoiits  for  interest/  only  bear  the  legal  rate  of 
the  forum,  generally  .^ 

Boio  jjroved.  Courts  cannot  judicially  notice  that  an- 
other state  or  jurisdiction  allows  interest,  nor  what  its 
rate  per  cent  is ;  these  laws  must  be  proved  as  a  fact  is 
proved.^  The  finding  of  the  jury  upon  the  evidence  is 
presumed  to  be  correct.*  If  the  jury  have  not  found  the 
rate,  the  court  may  consider  evidence,  in  a  case  depend- 
ing upon  it.^ 

The  published  law  of  such  other  state  is  the  best  evi- 
dence, the  testimony  of  a  witness  as  to  what  the  law  is 
not  being  sufficient.^  The  interpretation  of  the  foreign 
law  is  for  the  court,  and  not  the  jury.^ 

In  the  absence  of  all  proof  of  interest  in  another  juris- 
diction it  is  generally  presumed  that  no  interest  is  allowed 
there,  and  therefore  none  should  be  allowed  in  the  action  f 
and  that  if  it  is  proved  that  interest  is  allowed  in  the  for- 
eign state,  but  its  rate  is  not  proved,  or  if  it  has  no  legal 

'  1  G.  Gr.  (Iowa)  66  (1847)  ;  contra,  to  bear  rate  of  contract,  5  Cal. 
416  (1855). 

2  47  Iowa  477  (1877).  See  jucl2:ments  page  102. 

3  2  Port.  (Ala.)  239  (1835);  20  Ala.  470,  629  (1852);  81  Ala.  240 
(1886) ;  86  Ala.  541  (1888)  ;  4  Cal.  251  (1854)  ;  2  Bibb  (Ky.)  634  (1812)  ; 
1  Mou.  (Ky.)  209  (1814)  ;  IJ.  J.  Mar.  (Ky.)  94,  408  (1829)  ;  2  J.  J.  Mar. 
(Ky.)  146  (1829)  ;  4  J.  J.  Mar.  (Ky.)  238  (1830)  ;  19  La.  Ann.  373 
(1867);  92  N.  C.  266  (1885);  24  Pa.  St.  435  (1855);  1  Tex.  9 
(1846). 

*  Lit.  Sel.  Gas.  (Ky.)  505  (1821)  ;  5  S.  &  M.  (Miss.)  573  (1845). 

s  24  Pa.  St.  435  (1855). 

6  2  Wash.  (U.  S.,  C.  C.)  253  (1808);  7  Port.  (Ala.)  Ill  (1838);  8 
Port.  (Ala.)  250  (1839)  ;  4  Cal.  251  (1854)  ;  19  La.  Ann.  373  (1867). 

^24  Pa.  St.  435  (1855). 

8  1  Port.  (Ala.)  388  (1834) ;  4  Cal.  250  (1854)  ;  contra,  15  Gray 
(Mass.)  178  (1860) ;  2  Allen  (Mass.)  236  (1861),  which  cases  say  that 
the  lex  loci  forum  governs  as  to  interest  allowed  as  damages.  It  is 
necessary  that  the  foreign  law  be  averred  and  proved  if  it  would  be 
taken  advantage  of.    38  Iowa  237  (1874). 


154  THE    LAW    OF    INTEREST. 

rate,  the  general  practice  is  to  allow  the  legal  rate  of  tho 
place  where  the  action  is  brought.^ 

If  damages  arc  sought  to  be  recovered  on  a  demand 
arising  ont  of  the  state,  and  the  rate  of  those  damages  is 
fixed  ])y  legislation,  the  court  must  allow  that  special  rate, 
ii"  it  is  proved. 2 

II.    THE    CONVENTIONAL   RATE. 

This  is  the  rate  per  cent  expressly  agreed  upon  by  the 
parties  to  a  contract,  be  it  more  or  less  than  the  legal 
rate  ;  and  if  it  is  not  usurious  or  unconscionable  the  law 
Avill  always  enforce  the  conventional,  and  not  the  legal 
rate,  when  it  is  proved  to  exist,  and  what  it  is,^  unless 
there  is  fraud.*  If  the  rate  is  unconscionable  the  court 
will  not  be  bound  by  it.^  None  but  the  legal  rate  is  al- 
lowed, except  by  agreement,''  and  the  language  of  such  a 
contract  must  be  clear. ^ 

The  law  in  force  at  the  time  of  making  the  contract 
controls  as  to  whether  the  contract  is  usurious  or  not.** 
No  subsequent  change  in  the  legal  rate  can  uli'ect  an  exist- 
ing conventional  rate.^ 

12  "Wash.  (U.  S.,  C.  C.)  253  (1808);  24  111.  293  (18G0)  ;  2G  111.  30 
(1861)  ;  58  111.  58  (1871)  ;  38'Iowa  237  (1874)  ;  3  Mar.  (Ky.)  175  (1820)  ; 
12  La.  589  (1838);  IG  La.  557  (1840);  4  Met.  (Mass.)  203  (1842);  5 
Gray  (Mass.)  9  (1855)  ;  7  Gray  (Mass.)  5GG  (1856) ;  15  Gray  (Mass.) 
178  (18G0)  ;  129  Mass.  COO  (1880)  ;  4  Miuu.  515  (18C0)  ;  contra,  I  Port. 
(Ala.)  388  (1834). 

2  7  Port.  (Ala.)  Ill  (1838). 

3  2  Cal.  568  (1852) ;  1  Mart.  (La.)  7  (1809)  ;  51  N.  AV.  Ecp.  (Mich.) 
1057  (1892). 

♦  51  N.  W.  Rep.  (Mich.)  1057  (1892). 

*  12  Mass.  3G5  (1815). 

«  17  La.  Ann.  145  (18G5)  ;  IS  La.  Ann.  557  (1SG6)  ;  23  La.  Ann.  201 
(1871)  ;  30  La.  Ann.  1210,  1341  (1878)  ;  42  La.  Ann.  357  (1890). 
7  1  Wash.  T.  584  (1878). 

»  42  Conn.  570  (1875) ;  44  Conn.  300  (1877) ;  47  Conn.  418  (1879). 
9  14  Cal.  171  (1859)  ;  1  Fla.  35G  (1847);  5  Fla.  345  (1853). 


RATE    OF    INTEREST.  155 

If  a  contract  is  valid  where  it  is  made  and  where  it  is 
to  be  performed,  the  parties  may  stipulate  for  interest  ac- 
cording to  the  law  of  either  place. ^ 

A  subsequent  agreement  that  the  rate  of  interest  shall 
be  reduced  if  the  debt  is  paid  at  the  time  when  it  is  due 
is  not  binding,  if  it  is  not  so  paid,  and  the  old  rate  can 
be  recovered,'  as  there  is  no  consideration  to  support  the 
promise. 

The  rate  may  be  inferred  from  previous  dealings  be- 
tween the  parties.^     See  chapter  two,  at  page  20. 

"Ten  pr.  cen."  written  in  a  note  is  construed  to  mean 
ten  per  cent  mterest  per  annum.* 

A  new  promise,  reviving  a  note  that  is  barred  by  the 
statute  of  limitations,  also  revives  the  conventional  rate  of 
interest  that  it  bore.^ 

The  rate  specified  in  a  note  cannot  be  changed  by  a 
parol  agreement.^ 

A  third  parly  may  contract  to  be  substituted  as  debtor 
in  place  of  another ;  and  if  such  substitution  is  made,  the 
new  debtor  may  lawfully  contract  to  pay  the  rate  of  in- 
terest which  the  debt  bears,  notwithstanding  it  may  be 
higher  than  the  rate  then  allowed  by  law.^ 

How  proved.  Generally  the  rate  per  cent  agreed  upon 
can  be  proved  by  any  competent  evidence,^  unless  the 
statutes  of  the  state  make  it  imperative  upon  parties  to 
prove  rates  of  interest  that  are  larger  than  the  legal  rate 


'  92  Ala.  164  (1890). 

2  3  Dak.  449  (1884). 

3  81  111.  15  (1875). 

*  65  111.  310,  314  (1872). 

*  79  Ga.  301  (1887). 
«  126  Ind.  12  (1890). 

^  4  Cush.  (Miss.)  13  (1853)  ;  2  Geo.  (Miss.)  260  (1856). 
8  42  111.  179  (1866). 


15G  THE    LAW    OF    INTEREST. 

by  written  evidence.  Then,  the  statute,  of  course,  con- 
trols, except  where  there  are  circumstances  that  prove  an 
exception  to  tlie  statutory  requirement.^ 

Iftlie  rate  per  cent  is  included  in  the  written  contract, 
oral  evidence  cannot  he  admitted  to  change  it.^ 

If  the  evidence  of  a  debt  made  payable  in  another  state 
shows  on  its  face  that  it  bears  interest  proof  of  the  instru- 
ment is  proof  of  that  fact.^ 

A  contract  payable  in  another  state  at  a  rate  higher  than 
that  permitted  where  the  suit  is  brought,  is  governed  l)y 
the  rate  in  the  contract,  without  pleading  the  law  of  the 
foreign  state. ^ 

'  28  Cal.  302  (18G5). 

237  Ala.  702  (1861). 

^  13  Ala.  722  (1848),  -wliicli  was  an  action  brought  on  a  judgment. 

*  19  lud.  401  (1SC2). 


CHAPTER  VI. 

COMPOUND  INTEREST. 

COMPOUND  interest  is  interest  upon  interest ;  and, 
even  in  contracts  for  interest,  it  will  generally  not  be 
allowed,^  as  it  is  not  favored.^  It  is  upon  principles  of  jus- 
lice  alone  that  promises  are  ever  implied  or  duties  raised 
in  law.  Chancellor  Kent  said  that  chancery  declares  com- 
pound interest  to  be  inequitable,  unjust  and  oppressive. 
Interest  should  not  become  principal,  except  by  agreement 
of  the  parties.^  The  Roman  law  was  constant  in  its  con- 
demnation of  compound  interest ;  *  and  in  Kentucky  no 
agreement  for  compound  interest  will  be  enforced  in 
equity.^ 

The  right  to  compound  interest,  when  it  does  exist,  can- 
not be  impaired  by  legislation  declaring  the  true  intent 
and  meaning  of  statutes  previously  existing. '^ 

Conversion  of  interest  into  principal  by  judgment  or 
decree  is  not  technically  allowing  compound  interest.^ 

Compound  interest  is  waived,  where,  without  insisting 
on  its  payment,  simple  interest  is  accepted.^ 

•13  Vt.  430  (1841). 

2  72Ga.  803  (1884). 

38Blf.  (Ind.)  158  (184G)  ;  16  Ind.  ICO  (1861). 

n  Greeul.  (Me.)  48  (1830). 

"2  Mar.  (Ky.)  339  (1820). 

«104U.  S.  668  (1881). 

'2  Bland's  Ch.  (Md.)  306  (1830). 

Ml  Mich.  359  (1879). 

(157) 


158  THE   LAW    OF   INTEREST. 


I.    CONTRACTS  FOR  COMPOUND   INTEREST. 

Conipoiiiul  interest  cannot  be  contracted  for  before  the 
interest  becomes  clue  ;  ^  that  is,  interest  must  be  due  iind 
pa^^able  before  a  contract  can  l)e  made  to  pay  interest 
upon  that  interest.^  This  principle  does  not  arise  from 
the  usury  law,  but  is  a  rule  of  public  policy  which  forbids 
the  accumulation  of  interest  in  favor  of  negligent  cred- 
itors. It  has  been  held  not  to  apply  Avhere  one  agrees  to 
advance  money  to  purchase  property  for  the  benefit  of 
himself  and  another,  to  be  repaid  to  him,  with  compound 
interest,  only  out  of  the  proceeds  of  sales. ^ 

An  agreement  to  pay  compound  interest  before  any  in- 
terest is  due  on  the  contract  does  not  render  the  contract 
cither  usurious  or  void  ;  the  courts  will  simply  decline  to 
enforce  payment  of  the  interest  upon  interest,  and  give 
judgment  for  the  valid  part.^ 

If  an  agreement  is  made  to  convert  interest  already  due 
and  payable  into  principal,  or  if  accounts  between  parties 
are  settled  by  rests,  and  therefore  in  eflect  upon  the  priu- 

1  2  Salk.  (Eng.)  449  (1707)  ;  Mos.  (Eng.)  247  (1729)  ;  1  Ves.  jr. 
(Eng.)  99  (1790);  9  Ves.  (Eng.)  271  (1804);  1  Ball  &  B.  (Ire.)  428 
(1810)  ;  54  Ala.  G46  (1875)  ;  IC  Col.  2G3  (1891)  ;  17  Conn.  243  (1845)  ; 
24  Md.  C2  (18G5);  8  Mass.  455  (1812);  13  Met.  (Mass.)  G4  (1847);  2 
Cush.  (Mass.)  92  (1848)  ;  41  Mich.  533  (1879)  ;  2  Minn.  350  (1858)  ;  51 
Miss.  298  (1875);  1  Mon.  183  (1870);  54  N.  "W.  Rep.  (Neb.)  129 
(1893);  1  Nev.  161  (18C5)  ;  1  Johns.  Ch.  (N.  Y.)  13  (1814);  5  Paige's 
Ch.  (N.  Y.)  98  (1835)  ;  3  Supm.  Ct.  (T.  &  C.)  (N.  Y.)  783  (1874)  ;  21 
Ore.  333  (1891)  ;  16  Vt.  44  (1844)  ;  4  Rand.  (Va.)  406  (1826)  ;  20  W. 
Va.  148  (1882);  co7Ura,  54  Cal.  562  (1880);  3  Dak.  449  (1884);  84 
Tex.  46  (1892)  ;  1  Wash.  42G  (1890). 

^  IG  Col.  263  (1891 )  ;  105  111.  540  (1883)  ;  2  Blf .  (Ind.)  43  (1827)  ;  42 
Ind.  450  (1873)  ;  3  Gill  (Md.)  408  (1845)  ;  24  Md.  62  (18C5)  ;  41  Mich. 
533  (1879)  ;  2  Minn.  350  (1858)  ;  51  Miss.  298  (1875)  ;  16  Vt.  44  (1844). 

3  9  Paige  (N.  Y.)  334  (1841). 

no  Col.  263  (1891). 


COMPOUND   INTEREST.  159 

ciple  of  compound  interest,  it  isiillowed/  but  it  must  have 
a  consideration  to  support  it.^  It  can  be  done  by  settling, 
agreeing  upon  a  certain  sum  due,  which  will  include  the 
interest  already  due,  or  upon  recovery  of  a  judgment, 
which  makes  a  new  principal  out  of  the  old  principal  and 
interest  combined,  and  this  new  principal  will  carry  inter- 
est.^ The  court  cannot,  however,  add  the  interest  already 
due  at  the  maturity  of  the  note  to  the  principal,  and  allow 
interest  on  the  aggregate  amount  from  the  maturity  of 
the  note  to  the  time  the  judgment  is  given,  the  interest 
being  agreed  to  be  paid  until  the  note  was  paid.*  If  an 
agreement  for  compound  interest  is  held  valid,  and  no 
mode  of  reckoning  is  designated  it  must  be  by  annual  rests.^ 

It  has  been  held  that  a  contract  to  pay  interest  upon  in- 
terest by  an  infant,  after  it  has  accrued,  will  be  binding 
upon  him  if  the  contract  is  for  his  benefit.*' 

"When  coupons  state  that  interest  is  to  be  allowed  upon 
them,  the  court  in  Nebraska  holds  that  the  contract  is  good, 
unless  it  is  usurious.'^ 

II.     WHEN  ALLOWED  AS    DAMAGES. 

A  debtor  is  never  bound  to  pay  interest  on  interest  un- 

1  G.  Coop.  Ch.  (Eng.)  231  (1815) ;  1  Ball  &  B.  (Ire.)  428  (1810) ;  23 
Am.  R.  99;  5-1  Ala.  646  (1875)  ;  2  B.  Mon.  (Ky.)  335  (1842)  ;  12  La. 
Ann.  20,  723  (1857) :  3  Gill  (Md.)  408  (1845)  ;  23  Pick.  (Mass.)  167 
(1839)  ;  1  Mon.  183  (1870)  ;  6  Johns.  Ch.  (N.  Y.)  313  (1822)  ;  5  Paige's 
Ch.  (N.  Y.)  98  (1835)  ;  17  How.  Pr.  (N.  Y.)  255  (1859)  ;  63  N.  Y.  631 
(1875)  ;  67  N.  Y.  162  (1876)  ;  3  Ham.  (0.)  18  (1827)  ;  4  0.  363  (1831)  ; 
11  Ore.  66  (1883) ;  4  Yeates  (Pa.)  220  (1805) ;  1  H.  &  Munf.  (Va.)  4 
(1806)  ;  4  Rand.  (Va.)  406  (1826). 

2  23  Am.  R.  99;  67  N.  Y.  162  (1876)  ;  57  Tenn.  490  (1870). 

3  1  Baldw.  (U.  S.,  C.  C.)  536  (1832)  ;  34  Pa.  St.  210  (1859). 

4  3  La.  431  (1832). 

6  58  Tenn.  46  (1870). 

«  1  Eq.  Cas.  Abr.  (Eng.)  287  (1699). 

7  28  Neb.  358  (1889);  51  N.  W.  Rep.  (Neb.)  753  (1892);  54  N.  W. 
Rep.  (Neb.)  129  (1893). 


1(30  THE    LAW    OF    INTEREST. 

til  it  is  due  ;  ^  and  it  i.s  not  gciierall\'  allowed  at  any  time, 
either  at  law  or  equity,-  to  those  holding  simply  the  rela- 
tion of  debtor  and  creditor.^    Some  courts  hold  that  interest 
is  never  a  legal  incident  to  the  non-payment  of  interest.* 
This  is  the  true  rule,  undoubtedly,   where  it  is  not  due 
before  the  principal,  and  where  no  agreement,  express  or 
implied,  has  been  made  to  convert  interest  into  principal.^ 
As,  for  instance,  a  mortgagee  Avho  has  taken  possession  of 
the  premises  has  no  right  to  reckon  interest  on  the  mort- 
o-af^e  debt  to  the  time  of  takino'  possession,  and  then  make 
the  afr2:regate  sum  of  principal  and  interest  a  new  princi- 
pal on  which  interest   can  be  cast  till  the  mortgage  is 
redeemed."     Compound  interest  is  not  allowed  on  a  mort- 
iraije,  'preliminary  to  a  decree  in  foreclosure.  ^    The  New 
York  court,  however',  holds  that  an  assignee  of  a  mortgagee 
can  claim  interest  on  the  principal  and  interest  he  paid  on 
it.      In  a  suit  on  a  note  drawing  simple  interest,  the  court 
will  not  reckon  interest  to  the  date  of  the  writ,  and  then 
compute  interest  on  the  aggregate  of  principal  and  interest 
to  verdict,  but  only  on  the  principal  sum.^° 

There  are  three  rules  extant  in  the  decisions  of  the 
courts  relative  to  this  subject.     The 

First  rule  is,  that  interest  shall  be  allowed  on  interest 
payable  at  agreed   times  before  the  principal,  from  the 

>  23111.  377  (1860)  ;  13-i  111.  294  (1890). 

"-  2  Bland's  Ch.  (McI.)  IGG  (1829)  ;  Conf.  (N.  C.)  435  (1800)  ;  5  O.  2G1 
(1831)  ;  13  Teun.  310  (1833) ;  43  Tenn.  582  (18GG). 

^  1  Stew.  (N.  J.)  403  (1877) ;  3  H.  &  M.  (Va.)  89  (1808). 

^5  La.  33  (1832) ;   34  Pa.  St.  210  (1859)  ;  4  Rand.  (Va.)  181  (182G). 

=■84  Mo.  202  (1884);  34  Pa.  St.  210  (1859);  1  Strob.  (S.  C.)  115 
(184G),  42G  (1847)  ;  25  W.  Va.  288  (1884). 

"5  Spauld.  (Me.)  323  (1883). 

'  1  Ilalst.  Ch.  (N.  J.)  232,  245  (1845). 

«  14  III.  1  (1852)  ;   87  I11j»23  (1877). 

9  5  Wend.  (N.  Y.)  572  (1830). 

"'43N.  II.  409  (1SG2). 


COMPOUND   INTEREST.  IGl 

time  that  the  interest  is  payable.^  This  rule  does  not  apply 
to  any  instalments  of  interest  but  those  that  are  payable 
before  the  principal  is  due.^  Query,  as  to  the  application 
of  the  rule  where  the  ao:reemcnt  is  to  pay  the  interest  at 
stated  times  until  the  principal  shall  be  paid.  lu  such  a 
case,  it  seems  as  thou2:h  the  court  endorsini;;  this  rule  ou2;ht 
to  allow  interest  on  the  unpaid  instalments  of  interest. 

In  these  cases,  the  terms  "  annual  interest"  and  "  interest 
annually"  mean  the  same  thing.^ 

Second  rule.  This  is  just  the  opposite  of  the  foregoing 
rule.  The  reasonins:  of  the  court  is  that  as  interest  can  be 
recovered  by  suit  at  any  time,  the  creditor's  neglect  may 
be  considered  a  waiver  of  his  right  to  compound  interest.* 
The  reason  of  the  rule  is  very  weak,  however,  because  as 
a  suit  can  be  brought  for  the  principal  (unless  by  express 
agreement  of  the  parties  interest  is  payable  at  stated  times 
before  the  principal)  as  soon  as  it  becomes  due  creditors 
have  no  right  to  simple  interest,  and  by  not  bringing  a 
suit  the  right  to  any  interest  is  waived. 

1 132  U.  S.  107  (1889)  ;  46  Ala.  63  (1871)  ;  29  Cal.  386  (18G6)  ;  23  Fla. 
223  (1887)  ;  61  Ga.  275  (1878)  ;  65  Ga.  386  (1880)  ;  134  111.  294  (1890)  ; 
9  Daua  (Ky.)  331  (1840)  ;  2  Heatli  (Me.)  308  (1853)  ;  2  Mass.  508 
(1803)  ;  2  Ciisli.  (Mass.)  92  (1848)  ;  19  Miim.  338  (1873)  ;  25  Minn.  314 
(1879)  ;  1  N.  H.  179  (1818)  ;  46  N.  Y.  300  (1865)  ;  1  Johns.  Cli.  (N.  Y.) 
550  (1815);  86  N.  Y.  618  (1881);  Conf.  (N.  C.)  435  (1800);  Cam.  & 
N.  (N.  C.)  357  (1800)  ;  69  N.  C.  89  (1873)  ;  4  O.  373  (1831)  ;  17  O.  St. 
11  (1866);  26  O.  St.  59  (1875);  40  O.  St.  248  (1883);  46  O.  St.  345 
(1889)  ;  10  R.  I.  223  (1872)  ;  2  N.  &  McC.  (S.  C.)  38  (1819) ;  2  Hill 
(S.  C.)  408  (1834)  ;  3  Rich.  (S.  C.)  125  (1846)  ;  63  Tenu.  128  (1872)  ; 
37  Tex.  315  (1872)  ;  16  Vt.  44  (1844)  ;  23  Vt.  286  (1851). 

«9R.  I.  132  (1868). 

3  16  Vt.  44  (1844)  ;  23  Vt.  286  (1851). 

"  1  Ves.  jr.  (Eng.)  99  (1790)  ;  54  Ala.  646  (1875)  ;  66  Cal.  658  (1885)  ; 
17  Conn.  243  (1845)  ;  25  Iowa  319  (1868)  ;  7  Greenl.  (Me.)  48  (1830)  ; 
3  Heath  (Me.)  513  (1854);  2  Hub.  (Me.)  445  (1859);  8  Mass.  455 
(1812)  ;  2  Cnsh.  (Mass.)  92  (1848)  ;  13  Midi.  303  (1805)  ;  2  Minn.  350 
(1858)  ;  24  Minn.  207  (1877)  ;  67  N.  Y.  102  (1870)  ;  1  Binn.  (Pa.)  152 
(1800)  ;  35  Vt.  140  (1862)  ;  10  Leigh  (Va.)  481  (1839). 
11 


lG-2  THE    LAW    OF    INTEKKST. 

T/tinl  rule.  Aiiotlicr  rule  is,  that  interest  rims  upon 
intere!>t  from  tuul  after  a  demand  made  for  the  interest; 
as  in  an  action  to  recover  tlie  interest  that  was  due  at 
stated  times  upon  a  note,  interest  was  aUowed  upon  each 
instahnent  of  interest,  demand  having  been  made  there- 
for at  each  time  it  became  due.^ 

In  certain  special  equitable  cases,  compound  interest  is 
allowed  in  order  that  justice  may  be  done  to  a  party,^as 
in  cases  of  default  of  payment  on  land  contracts.^  Trustees 
and  other  persons  having  fiduciary  relations,  who  convert 
the  trust  money  to  their  own  use,  or  employ  it  in  business 
or  trade,  or  fail  to  invest  it,  are  arbitrarily  chargeable  with 
compound  interest,^  generally,  by  annual  rests.''  This  is 
also  the  rule  where  they  will  not  disclose  the  amount  of 
the  profits  they  have  made  with  the  money. ^ 

In  reckoning  interest  where  a  judgment  has  l)een  af- 
firmed on  a  writ  of  error,  care  should  be  taken  not  to  give 
interest  on  interest.^  So  on  a  suit  for  principal  and  in- 
terest of  a  note  each  shoukl  be  stated  separately,  so  that 
in  the  judgment  it  can  be  stated  what  part  is  interest,  that 
interest  be  not  allowed  on  it.^ 

Compound  interest  is  allowed  by  the  way  of  merchants 
accounting  together,  where  they  have  charged  interest  ou 
the  various  items,  making  periodical  rests. ^     But  not  on 


'5  Red.  (Me.)  75  (1852)  ;  8  R.  I.  47  (18G4). 

2  2  Ves.  jr.  (Eng.)  15  (1792)  ;  35  Cal.  692  (1868). 

344  Mich.  622  (1880). 

M3G  Mass.  60  (1883) ;  1  Johns.  Ch.  (N.  Y.)  620  (1815). 

*5L.  R.  Ch.  (Eug.)  233  (1870);  39  L.  J.,  Ch.  (Bug.)  369  (1870)  ;  136 
Mass.  GO  (1883). 

«  5  Johns.  Ch.  (N.  Y.)  497  (at  p.  517)  (1821). 

75  Ala.  195  (1843). 

«  Minor  (Ala.)  115  (1823)  ;  19  Cal.  97  (18GI)  ;  1  J.  J.  Mar.  (Ky.)  166 
(1829);  1  Gill  (Md.)  372  (1843). 

»  8  C.  &  F.  (Eng.)  121  (1841)  ;  11  Met.  (Mass.)  210  (1846). 


COMPOUND   INTEREST.  163 

ordinary  unliquidated  accounts  ;^  nor  on  the  amount  paid  on 
a  forged  check. ^  Also,  where  an  account,  consisting  of 
principal  and  interest,  has  been  stated,^  and  a  note  given 
therefor.*  Compound  interest  ceases  to  rnn  when  mutual 
dealings  end.^ 

Interest  is  allowed  on  coupons,  if  not  paid  when  due,® 
■without  demand,^  unless  a  fund  exists  for  their  payment.* 
Where  a  mortgage  is  given  to  secure  the  principal  and 
coupons  given  for  the  interest,  they  will  draw  interest 
after  maturity  the  same  as  a  note.^ 

Judgments  and  decrees  carry  interest  on  the  aggregate 
of  principal  and  interest. ^°  The  court  in  South  Carolina 
holds,  however,  that  as  interest  is  stated  damages  on  pe- 
cuniary liabilities,  to  find  a  sum  with  interest  in  an  action 
sounding  in  damages  is  to  allow  damages  on  damages, 
which  is  an  incongruity." 

Compound  interest  is  allowed  in  an  action  for  dividends 
on  preferred  stock ,^2  by  New  York  courts. 

Where  money  is  on  deposit  in  the  hands  of  a  private 
person,  who  promises  to  pay  interest  on  the  same,  and 
after  some  interest  has  accrued  informs  the  owner  that  he 

'  4  Cow.  (N.  Y.)  49G  (1825)  ;  22  O.  St.  372  (1872). 
291  N.  Y.  74  (1884). 

3  1  Jolius.  Ch.  (N.  Y.)  13  (1814). 

4  88Cal.  384  (1891). 
MDesau.  (S.  C)  427  (1795). 

6  41  Barb.  (N.  Y.)  9  (1863) ;  64  Hun  (N.  Y.)  120  (1892)  ;  54  Pa.  St. 
94  (1867)  ;  124  Pa.  St.  58  (1889)  ;  2  S.  C.  248  (1870)  ;  48  Tena.  402 
(1872)  ;  32  Tex.  405  (18G9)  ;  33  Grat.  (Va.)  586  (1880)  ;  20  Wis.  50 
(1865). 

'2  S.  C.  248  (1870). 

8  48Tenn.  402  (1872). 

970111.  581  (1873). 

i»5  Cal.  416  (1855)  ;  13  S.  E.  Rep.  (Va.)  438  (1891)  ;  12  W.  Va.  143 
(1877)  ;  14  W.  Va.  737  (1879) ;  24  W.  Va.  344  (1884)  ;  contra,  1  Nev. 
613  (1805)  ;  43  Tena.  579  (1866). 
'»  2  Spears  (S.  C.)  594  (1844). 
12  84  N.  Y.  157  (1881)  ;  85  N.  Y.  272,  274  (1881). 


llU  THE    LAW    OF    INTEREST. 

has  [)ut  that  interest  to  his  credit,  it  does  not  foUow  tliat 
thatinterest  bears  interest.^  Neither  can  a  debtor  be  com- 
pelled to  pay  compound  interest  on  a  del)t  by  reason  of 
an  indorsement  on  the  contract  acknowledirinn:  payment 

O         Oil' 

of  a  portion  of  the  debt,  and  stating  an  amount  as  due.^ 

III.       IF   PAID   IT    CANNOT   BE    RECOVERED. 

The  courts  go  so  for  as  to  hold  that  if  compound  inter- 
est has  accrued  under  a  prior  bargain  for  it,  and  been 
actually  paid,  it  cannot  be  recovered,^  if  it  is  voluntarily 
paid  ;■*  nor  can  the  debtor  have  it  deducted  when  sued  for 
the  principal  debt.^  If  it  is  paid  through  error,  however, 
it  can  be  recovered. '^  In  Montana,  it  is  held  tliat  a  note 
given  in  renewal  of  a  note  to  which  compound  interest 
has  been  added  is  to  that  extent  void.^ 

IV.    COMPOUND   INTEREST    TABLES. 

The  following  tables  give  the  compound  interest  on  one 
dollar  for  the  given  rates  and  time,  one  being  for  use 
when  interest  is  compounded  annually  and  the  other  semi- 
annually. 

Multiply  the  amount  of  the  principal  by  the  compound 
interest  on  one  dollar  for  the  desired  rate  and  time  as 
found  by  the  table,  and  the  result  will  be  the  compound 
interest  on  that  amount  for  that  rate  and  time. 

If  it  is  desired  to  know  what  the  compound  interest 
will  amount  to  for  longer  periods  than  those  given  in  the 

'  10  Hun  (N.  Y.)  173  (1877). 

2  18  Hun  (N.  y.)  452(1879). 

=»  U  La.  34  (1839);  3  N.  H.  40  (1824);  5  Paige-s  Ch.  (N.  Y.)  98 
(1835). 

*  15  La.  378  (1840)  ;  3  Supm.  Ct.  (T.  &  C.)  (N.  Y.)  783  (1874). 

'=  14  La.  34  (1839). 

s  14  La.  Ann.  10  (1859),  3  Mon  153  (1878);  2  Denio  (N.  Y.)  107 
(1846). 

'3  Mon.  153  (1878). 


COMPOUND    INTEREST. 


165 


tables,  find  out  as  above  "svhat  the  compound  interest 
amounts  to  for  the  longest  time  given  as  above,  and  add  it 
to  the  principal.  Using  this  sum  as  a  new  principal,  repeat 
the  operation  until  the  number  of  years  desired  has  been 
covered. 

COMPOUND   INTEREST   TABLE. 

Interest  compounded  semi-annuallij . 


YEARS. 

4% 

5% 

c% 

7% 

o  n/ 

0  % 

10% 

1 

.040400 

.050625 

.060900 

.071225 

.081600 

.092025 

.102500 

u 

.0G1208 

.076891 

.092727 

.108718 

.124864 

.141166 

.157625 

2 

.082432 

.103813 

.125509 

.147523 

.169859 

.192519 

.215506 

2h 

.104081 

.131408 

.159274 

.187686 

.216653 

.24G182 

.276282 

3 

.1261G2 

.159693 

.194052 

.229255 

.265319 

.302260 

.340096 

ok 

.148G8G 

.188G86 

.229874 

.272279 

.315932 

.360862 

.407100 

4 

.171659 

.218403 

.266770 

.316810 

.368569 

.422101 

.477455 

4i 

.195093 

.248862 

.304773 

.362898 

.423312 

.486095 

.551328 

5 

.218994 

.280084 

.343916 

.410600 

.480244 

.552969 

.628895 

ok 

.243374 

.312086 

.384234 

.459971 

.539454 

.622853 

.710339 

G 

.268242 

.344888 

.425761 

.511070 

.601032 

.695881 

.795856 

Gi 

.293607 

.378510 

.468534 

.563957 

.665073 

.772196 

.885649 

7 

.319478 

.412973 

.512590 

.618G96 

.731676 

.851945 

.979932 

7i 

.3458G8 

.448297 

.557967 

.675350 

.800943 

.935282 

8 

.372786 

.484504 

,604706 

.733987 

.872981 

8i 

.400241 

.521617 

.652848 

.794676 

.947900 

9 

.428246 

.559657 

.702433 

.857491 

9-i 

.45G811 

.598618 

.753506 

.922503 

10 

.485947 

.638615 

.806111 

.989791 

lOi 

.515666 

.679580 

.860294 

11 

.545980 

.721570 

.916103 

lU 

.576899 

.761609 

.973586 

12 

.608437 

.808724 

12i 

.640606 

.853942 

13 

.673418 

.900291 

13i 

.706886 

.947798 

U 

.741024 

.996493 

144 

.775845 

15 

.811361 

154 

.847589 

IG 

.884540 

1C4 

.922231 

17 

.960676 

174 

.999889 

1G6 


THE   LAAV    OF   INTEREST. 


COMPOUND  INTEREST  TAI5LE. 

Interest  compounded  annually. 


YEARS. 

•i  /o 

5% 

c% 

7% 

8% 

9% 

10% 

2 

.081000 

.102500 

.123000 

.144900 

.100400 

.188100 

.210000 

3 

.12480-1 

.157025 

.191010 

.225013 

.259712 

.295029 

.331000 

4 

.109859 

.215500 

.262477 

.310796 

.300489 

.411582 

.404100 

5 

.216053 

.270282 

.338226 

.402552 

.409328 

.538024 

.010510 

6 

.265319 

.340096 

.418519 

.500730 

.580874 

.677100 

.771501 

7 

.315932 

.407100 

.503631 

.605781 

.713824 

.828039 

.948717 

8 

.368509 

.477455 

.593849 

.718186 

.850930 

.992503 

9 

.423312 

.551328 

.689480 

.838459 

.999004 

10 

.480244 

.028895 

.790848 

.967151 

11 

.539454 

.710339 

.898300 

12 

.001032 

.795856 

13 

.665073 

.885649 

14 

.731676 

.979932 

15 

.800943 

16 

.872981 

17 

.947900 

CHAPTER  VII. 

PARTIAL  PAYMENTS. 

EVEEY  payment  on  a  debt  is  to  be  first  applied  toward 
tlie  payment  of  interest  due  at  the  time  the  payment 
is  made,  or  when  the  interest  afterward  becomes  due  under 
the  contract,  and  the  interest  is  never  allowed  to  form  a 
part  of  the  principal  to  carry  interest.^  If  the  legislature 
should  reduce  the  legal  rate,  payments  made  before  the 
reduction  will  be  first  applied  to  the  higher  rate,  and  if 
made  afterward  to  the  lower  rate.^  That  is,  pa^^ments 
must  first  be  applied  to  the  interest  on  interest ;  second, 
to  interest  on  the  principal ;  and,  third,  to  principal.^  Of 
course,  parties  can  agree  otherwise  f  but  where  no  agree- 
ment is  shown  it  is  presumed  that  these  rules  were  to  be 
observed. 

If  part  of  a  debt  is  paid  before  it  becomes  due,  the  debtor 
is  not  to  be  allowed  interest  on  the  amount  he  has  so  paid 
from  the  time  he  paid  it  to  the  time  it  became  due,^imless 
by  agreement,  when  the  amount  of  interest,  from  the  date 
of  payment  to  the  maturity  of  the  debt  is  to  be  subtracted 

1  2  Wash.  (U.  S.,  C.  C.)  167  (1808)  ;  17  Mass.  417  (1821) ;  1  Pick. 
(Mass.)  194  (1822);  31  N.  H.386  (1855);  43  N.  H.  109  (18G1)  ;  46N.  H. 
SCO  (1865)  ;  2  Johns.  Ch.  (N.  Y.)  209  (1816)  ;  1  Call.  (Pa.)  378  (1788) ; 
2  N.  &  McC.  (S.  C.)  395  (1820)  ;  16  S.  C.  15,  469  (1881)  ;  4  Tex.  455 
(1849). 

2  28  O.  St.  266  (1876). 
n7  0.  St.  11  (1866). 
MTes.  455  (1849). 
*7Ala.  359  (1845). 

(167) 


1G8  THE     LAW    OF    INTEREST. 

from  the  amount  of  the  interest  on  the  whole  debt  to  the 
time  it  became  diie.^     See  page  141. 

The  following  is  the  approved  rule  in  many  states  for 
casting  interest  on  a  debt  where  there  have  been  partial 
l)ayments.  When  a  partial  payment  exceeds  the  amount 
of  interest  due  Avhen  it  is  made,  compute  the  interest  to 
the  time  of  such  payment,  add  it  to  the  principal,  subtract 
the  payment,  cast  interest  on  the  remainder  to  the  time 
of  the  second  payment,  add  it  to  the  remainder  and  sub- 
tract the  second  payment,  and  in  like  manner  proceed  from 
one  payment  to  another  until  the  time  of  judgment ;  if  any 
payment  is  less  than  the  amount  of  interest  then  due, 
credit  it  as  a  payment  toward  the  interest ;  being  always 
careful  not  to  let  any  part  of  the  interest  l)econie  a  part 
of  the  new  principal,  as  inadvertently  it  may  occur  if  the 
payment  is  less  than  the  amount  of  interest  due.^ 

'  1  Dall.  (Pa.)  12i  (178.5). 

-  2  Wash.  (U.  S.,  C.  C.)  1G7  (1808)  ;  13  Pet.  (U.  S.)  .359  (1839)  ;  35 
Cal.  G92  (18G8)  ;  72  Cal.  568  (1887) ;  3  Harr.  (Del.)  469  (1842)  ;  2  Fla. 
445  (1849);  20  111.  509  (1858);  66  111.  351  (1872);  2  Blf.  (lud.)  43 
(1827)  ;  3  Blf.  (Ind.)  18  (1832)  ;  28  Ind.  488  (1867)  ;  57  Ind.  248  (1877)  ; 
3  G.  Gr.  (Iowa)  76  (1851) ;  1  Mar.  (Ky.)  584  (1819) ;  5  .1.  J.  Mar.  (Ky.) 
83  (1830)  ;  5  Daua  (Ky.)  570  (1837) ;  7  Bush  (Ivy.)  197  (1871)  ;  86  Ky. 
668  (1888)  ;  1  Mart.  N.  S.  (La.)  571  (1823) ;  4  La.  239  (1832)  ;  8  Rob. 
(La.)  6  (1844);  5  La.  Ann.  738  (1850);  1  Heath  (Me.)  265  (1853);  4 
II.  &  M'H.  (Md.)  91  (1797)  ;  17  Mass.  417  (1821)  ;  1  Pick.  (Mass.)  194 
(1822) ;  14  Gray  (Mass.)  114  (1859)  ;  144  Mass.  448  (1887)  ;  146  Mass. 
148  (1888)  ;  21  Mich.  524  (1870)  ;  57  Mich.  430  (1885)  ;  82  Mich.  190 
(1890);  8  S.  &M.  (Miss.)  368  (1847);  1  Geo.  (Miss.)  66(1855);  2  Geo. 
(Miss.)  51,  578(1856);  54  Miss.  272(1876);  14  Mo.  500  (1851) ;  10 
Mon.  154  (1890)  ;  4  Neb.  190  (1875)  ;  7  Neb.  78  (1878)  ;  31  N.  H.  386 
(1855);  43  N.  H.  109  (1861);  1  Halst.  (N.  J.)  408  (1797);  2  Gr.  Ch. 
(N  J.)  300  (1835)  ;  4  Dutch.  (N.  J.)  13  (1859)  ;  1  Johns.  Ch.  (N.  Y.) 
13  (1814) ;  6  Johns.  Ch.  (N.  Y.)  313  (1822) ;  3  Cow.  (N.  Y.)  86n  (1824)  ; 
7  Barb.  (N.  Y.)  452  (1849) ;  1  Ilayw.  (N.  C)  279  (1796)  ;  Bat.'s  Mart. 
isi2(l  Hay'd(N.  C.)  169(1797);  5  0.262,263(1831);  17  0.  St.  11  (1866); 
1  Dall.  (Pa.)  378  (1788)  ;  18  Tenn.  160  (1836)  ;  29  Tex.  419  (1867)  ;  31 
Tex.  613  (1869);  1  Utah  63  (1871);  4  II.  &  M.  (Va.)  431  (1809);  68 
Wis.  56,  160  (1883). 


PARTIAL   PAYMENTS.  169 

In  March,  1784,  the  supreme  court  of  Connecticut  "es- 
tablished a  standing  rule  for  computing  interest  on  obliga- 
tions, where  one  or  more  payments  have  been  made,  as 
follows  : — Compute  the  interest  to  the  time  of  the  first 
payment ;  if  that  be  one  year  or  more  from  the  time  the 
interest  commenced ;  add  it  to  the  principal  and  deduct 
the  payment  from  the  sum  total.  If  there  be  after  pay- 
ments made,  compute  the  interest  on  the  balance  due  to 
the  next  payment,  and  then  deduct  the  payment  as  above  ; 
and  in  like  manner  from  one  payment  to  another,  till  all 
the  payments  are  absorbed ;  provided  the  time  between 
one  payment  and  another  be  one  year  or  more. — But  if 
any  payment  be  made  before  one  year's  interest  hath  ac- 
crued, then  compute  the  interest  on  the  principal  sum  due 
on  the  obligation  for  one  year,  add  it  to  the  principal,  and 
compute  the  interest  on  the  sum  paid,  from  the  time  it  was 
paid,  up  to  the  end  of  the  year;  add  it  to  the  sum  paid, 
and  deduct  that  sum  from  the  principal  and  interest  added 
as  above.  If  any  payments  be  made  of  a  less  sum  than 
the  interest  arisen  at  the  time  of  such  payment,  no  inter- 
est is  to  be  computed  but  only  on  the  principal  sum  for 
any  period."^ 

These  rules  apply  to  judgments,^  legacies,^  where  ad- 
vances have  been  made  to  a  tirm  by  one  of  the  partners,* 
and  in  settlement  with  administrators^  and  morto-ao-ees,^ 
as  well  as  to  other  contracts  ;  but  they  are  inapiDlicai)Ie  to 
accounts,  with  mutual  credits,  between  merchants.^ 

Where  by  agreement  property  is  applied  to  the  payment 

'  Kirby  (Conn.)  49  (1786) ;  U  Conn.  445  (1841). 

2  2  N.  H.  1G9  (1820)  ;  8  S.  &  R.  (Pa.)  452  (1822)  ;  27  Vt.  20  (1854). 

^  14  Gray  (Mass.)  114  (1859)  ;  5  Jones  Eq.  (N.  C)  1G7  (1859). 

*  1  Geo.  (Miss.)  6G  (1855). 

5  2  Geo.  (Miss.)  578  (1856). 

®  5  Pick.  (Mass.)  259  (1827). 

^8  Fla.  214  (1858). 


170  THE    LAW    OF    INTEREST. 

of  :i  di'l»l  bearing  interest,  it  must  l)c  applied ^?'0  rata  to 
principal  and  interest.^ 

Ill  Lcniisiana,  if  a  payment  is  not  sullicicnt  to  pay  the 
interest  then  due,  the  rule  is,  to  strike  a  new  bahince  and 
compute  interest  on  the  bahuicc  of  interest. - 

Any  payment  made  on  a  debt  payable  by  instalments  is 
to  be  treated  as  a  partial  payment  of  the  whole  debt." 

Upon  a  note,  with  interest  annually,  the  computation 
at  the  end  of  the  year  should  not  be  with  rests  on  account 
of  intermediate  payments  ;  but  if  such  intermediate  pay- 
ments were  on  account  of  the  interest  accruing,  but  not 
yet  due,  they  should  be  deducted  at  the  end  of  the  year 
l)ut  without  interest  upon  them.  And  where  a  note  bears 
simple  interest  and  yearly  payments  are  made  of  sums  just 
equal  to  the  interest,  it  is  not  correct  to  cast  the  interest 
upon  such  payments  to  the  time  of  the  linal  adjustment, 
as  in  process  of  time  the  whole  debt  would  thereby  l)e  ex- 
tinguished without  the  payment  of  any  principal  whatever, 
l)ut  the  payments  should  l)e  applied  at  the  time  they  are 
made.' 

Aj)j)Ucalion  of  j'^^fy^nents.  In  general,  where  neither 
the  debtor  nor  the  creditor  makes  an  application  of  the 
payments,  Avlierc  there  arc  several  debts  existing,  the 
payments  will  first  be  applied  to  the  discharge  of  the  old- 
est debts,  and  so  on  till  all  are  paid,  paying  interest  on  all 
the  debts  before  any  principal  of  the  several  debts  is  paid.^ 
Receiving  the  interest  and  part  of  the  principal  as  so  much 
paid  generally,  and  not  as  payment  of  the  principal  itself. 


»  1  La.  Aun.  2G5  (1846). 

■  10  La.  Ann.  159  (1855). 

3  3  Cow.  (N.  Y.)  8G  (1824)  ;  7  Barb.  (N.  Y.)  452  (1849). 

MGN.  IL  300  (18C5). 

*I1  AV..  Va.  549  (1877).. 


PARTIAL   PAYMENTS.  171 

does  not  preclude  the  recovery  of  the  remainder  of  the 
interest.^ 

The  fact  that  the  sum  sued  for  is  precisely  the  amount 
of  the  interest  does  not  show  that  the  principal,  as  such, 
has  been  paid.^ 

'  13  Wend.  (N.  Y.)  639  (1835). 
^5  Cow.  (N.  Y.)  331  (1826). 


CHAPTER  VIII. 

TLEADING  AND  I'liACTlCE. 

INTEREST  follows  the  principal  as  an  incident  to  it,  so 
long  as  it  remains  an  incident ;  but  when  it  is  sepa- 
rated and  set  apart  from  the  principal  by  actual  payment, 
or  by  being  carried,  when  due,  to  the  credit  of  the  owner 
of  the  i)rincipal,  in  his  account  with  the  debtor,  and  this 
in  pursuance  of  a  promise  in  the  contract  creating  and 
defining  the  principal  (k'l)t,  it  is  so  separated  and  disjoined 
from  iho  principal  as  to  cease  to  be  an  incident  to  it,  and 
does  not  follow  it.^ 

It  is  optional  with  a  i)arty  whether  he  will  claim  interest 
or  not,  —  a  i)art,  the  Avhole  or  none,  that  is,'-  if  the  law 
allows  it  ;  and  on  a  suit  for  it,  it  must  rise  or  fall  with  the 
})rincipal  del)t.' 

A  suit  cannot  be  brought  for  interest  alone  when  it  is 
due  as  damages,*  nor  after  the  principal  has  been  paid.'^ 
If  the  principal  has  been  paid,  and  contractual  interest 
due  has  not  been  paid,  the  interest  will  remain  due,  and 

'  G  0.  489   (185G). 

2  2  Gilm.  (111.)  380  (1845);  Spcn.  (N.J.)  265  (1844);  45  Pa.  St.  235 
(18C3);   28  Vt.  5G5  (1850). 

3  3  Spauld.  (Me.)  140  (1882). 

*  12  La.  Ann.  95  (1857).     Sec  5G  Ind.  288  (1877). 

*  19  Conn.  520  (1840)  ;  2  Mart.  (La.)  83  (1811)  ;  2  La.  518  (1831)  ;  4 
La.  Ann.  20  (1840)  ;  12  La.  Ann.  95  (1857)  ;  4  Ilnbb.  (Me.)  481  (ISGI) ; 
4  Tnls  rMe.)  572  (1878);  11  Mass.  217  (1814);  3  Johns.  (N.  Y.)  229 
(1808;  ;  15  Wend.  (N.  Y.)  7G  (1835);  119  N.  Y.  1  (1890);  22  Vt.  437 
(1850);  56  Vt.  GOO  (1884). 

(172) 


PLEADING    AND    PRACTICE.  173 

an  action  may  be  maintiincd  for  its  recovery,  if  it  was 
agreed  to  let  the  interest  remain  unpaid  awhile,  or  some- 
thing is  said  or  done  amounting  to  such  an  agreement.^ 
Interest  under  a  contract  for  it,  not  due  before  the  prin- 
cipal, cannot  be  sued  for,  therefore,  before  the  principal 
is  due,-  and  even  then  it  must  be  included  in  the  suit  brought 
to  recover  the  principal.^  If  it  is  interest  that  is  due  be- 
fore the  principal,  as  where  interest  has  been  agreed  to  be 
paid  semi-annually  orannually  it  can  be  recovered  by  a  suit 
brought  before  the  principal  of  the  debt  is  due.*  If  the 
contract  stipulates,  however,  that  the  interest  shall  be  due 
and  payable  annually,  not  simply  till  the  principal  is  due, 
but  till  it  is  paid,  then  a  suit  can  be  brought  for  the  inter- 
est alone  after  the  principal  is  due.^ 

If  a  plaintiff  commences  an  action  of  debt  on  a  judgment, 
and  the  amount  of  the  principal  is  then  paid  to  him,  he  may 
continue  the  action  for  the  recovery  of  the  interest.  To 
stop  interest  on  a  debt  after  suit  is  brought  thereon,  a  rule 
to  pay  the  mouey  into  court  should  be  obtained,  and  com- 
plied with.^ 

I.    PLEADING. 

Interest  must  be  pleaded  for,  either  in  a  count  or  in  a  , 

bill  of  particulars,^  but  the  plea  need  not  state  that  it  has  ^C 

■s 

'  10  Leigh  (Va.)  481  (1839). 

2  2  Mass.  5G8  (1803)  ;  3  Mass.  221  (1807)  ;  7  Barb.  (N.  Y.)  5G0  (1849)  ; 
16  Vt.  44  (1814). 

^  1  Espi.  (Eng.)  110  (1794)  ;  1  Appl.  (Me.)  31  (1841). 

"  21  Coun.  388  (1851)  ;  5  Red.  (Me.)  75  (1852)  ;  38  Mo.  461  (1866)  ;  11 
Mo.  App.  251  (1881);  15  Wend.  (N.  Y.)  76  (1835);  110  N.  C.  311 
(1892)  ;  4  0.  373  (1831)  ;  1  Binn.  (Pa.)  152  (1806)  ;  1  R.  I.  298  (1850). 
See32Ind.  328  (1869). 

"3  Conn.  445  (1820). 

«  1  N.&  McC.  (S.  C.)  242  (1818). 

'  1  Bradw.  (111.)  94  (1878)  ;  11  La.  224  (1837)  ;  20  La.  Ann.  217  (1868)  ; 
30  La.  Ann.  734  (1878)  ;  7  Rich.  (S.  C.)  118  (1854)  ;  14  Tex.  351  (1855)  ; 
contra,  on  an  award,  69  111.  179  (1873). 


174  THE    LAW    OF   INTEREST. 

not  been  paid.^  Generally,  the  claim  for  interest  must  be 
made  at  the  time  of  claiming  the  principal.^  The  contract 
itself  may  set  out  the  fact  that  interest  has  l^een  agreed  to 
be  paid,  and  the  pleading  of  a  copy  of  the  contract  will  be 
sufficient,  the  production  of  the  instrument  being  gener- 
ally competent  evidence  of  the  agreement  to  pay  interest. 
But  if  the  interest  is  claimed  simply  as  damages,  there 
having  been  no  agreement  to  pay  interest,  it  mu.st  be  ex- 
pressly claimed  in  the  declaration.^  Thus  much  depends 
upon  whether  the  interest  is  contractual  interest,  or  inter- 
est allowed  as  damages.* 

In  a  declaration  in  debt  on  a  judgment  the  usual  ad 
damnum  clause,  say  the  Alabama  and  Vermont  courts,  is  a 
sufficient  allegation  of  damages  to  entitle  the  plaintiff  to 
recover  interest.^ 

In  Alabama  a  court  will  not  decree  interest  on  a  balance 
unless  it  is  specially  asked  for  in  the  bill ;  but  this  rule  ap- 
plies only  to  interest  due  at  the  time  the  bill  is  filed.  When 
the  interest  accrues  subsequently,  it  is  the  practice  of  the 
court,  upon  further  directions  to  order  that  the  interest  be 
computed,  although  there  is  no  prayer  in  the  bill  to  that 
effect.*' 

Interest  as  damages  can  be  recovered  in  an  action  of 
assumpsit  as  well  as  on  account ;  ^  and  for  money  had  and 
received,  if  the  demand  bears  interest.^ 

>3Blf.  (Ind.)  401  (1834). 

n-l  Cal.  171  (1859). 

^  Kirby  (Conn.)  35  (178G)  ;  1  G.  Gr.  (Iowa)  33G  (1848)  ;  5  Kas.  254 
(1869);  IG  Kas.  209  (1876);  20  La.  Ann.  217  (1868);  30  La.  Ann.  734 
(1878).  The  courts  say,  in  the  cases  cited  1  How.  (Miss.)  230  (1835) 
and  7  Rich.  (S.  C.)  23  (1853),  that  a  count  is  unnecessary  •where  the 
law  gives  Interest  as  a  matter  of  course. 

*  14  Tex. 351    (1855). 

^  2  Port.  (Ala.)  519  (1835) ;  27  Vt.  20  (1854). 

«19  Ala.  4r,S   (1851). 

'Quincy  (Mass.)  5  (1762). 

8Cheves(S.  C.)  61  (1840). 


PLEADING    AND   PRACTICE.  175 

Where  a  petition  prays  judgment  for  "interest  and  costs," 
interest  is  allowed  only  from  the  commencement  of  the 
action.^ 

Interest  cannot  be  recovered  prior  to  the  time  it  is 
claimed  in  the  plea  or  petition.-  Neither  can  the  jury 
allow  it  prior  to  the  date  claimed  in  the  pleadings.^ 

Interest  will  be  allowed  against  a  trustee,  even  if  it  is 
not  prayed  for,  if  the  facts  disclosed  show  that  equitable 
interest  should  be  2:iven.* 

In  those  cases  where  the  allowance  of  interest  as  damages 
is  in  the  discretion  of  the  jury,  interest  need  not  be  ex- 
pressly claimed.^ 

In  an  action  of  debt  on  a  decree  for  money  which  did 
not  give  running  interest  thereon,  the  declaration  demanded 
interest  from  the  date  of  the  decree,  as  part  of  the  debt, 
and  the  declaration  was  held  bad  on  general  demurrer  by 
the  Virginia  court,  for  demanding  interest  as  part  of  the 
debt.« 

A  suit  for  an  instalment  of  interest  before  the  principal 
is  due  cannot  be  brought  on  a  general  indebitatus  count  iu 
assum-psit  for  money  had  and  received  without  stating  the 
nature  of  the  indebtedness.^  So  it  is  recoverable  in  an 
action  of  debt,^  and  if  this  is  the  form  interest  need  not 
be  demanded.^ 

Foreign  contracts.  See  chapter  nine,  pages  190  and  193. 


•  5  Iowa  503  (1857)  ;  6  Iowa  235  (1858)  ;  7  Iowa  85,  320  (1858)  ;  10 
Iowa  124,  233,  236  (1859)  ;  40  Iowa  49  (1874). 

2  45  Kas.  751  (1891). 

3  2  Mo.  App.  235  (187G). 
"  16  Md.  446  (1860). 

*  61  Ga.  482  (1878). 

«  7  Leigh  (Va.)  175  (1836). 

^21  Conn.  388  (1851). 

«  5  T.  K.  (Eng.)  553  (1794)  ;  2  Chit.  (Eng.)  234  (1817). 

9  3McC.  (S.  C.)  201  (1825). 


176  THE    LAW    OF   INTEREST. 

II.    PRACTICE. 

(a)  Province  of  the  court.  A  justice  has  no  authority 
to  render  a  judgment  bearing  more  than  legal  interest, 
even  by  the  consent  of  parties.^ 

An  appeHate  court  cannot  change  the  amount  of  interest 
erroneously  found  due  by  a  jury  in  the  lower  court ;  a 
new  trial  should  be  2;ranted.^  But  a  charire  allowinir  im- 
proper  interest  can  be  corrected  by  writing  off  the  excess, 
instead  of  having  a  new  trial.^  Errors  in  computation  of 
interest  should  be  corrected  by  motion  in  the  court  where 
the  mi>take  was  made."*  And  a  motion  for  a  new  trial  is 
a  proper  remedy  to  correct  errors  in  the  allowance  of  in- 
terest generally.^  A  slight  mistake  in  the  calculation  ,  as 
of  a  few  cents,  will  not  cause  the  judgment  to  be  set  aside, 
and  a  new  trial  granted."  Neither  is  such  a  mistake,  Avhere 
the  dates  are  given,  evidence  of  fraud. ^  Where  interest 
is  improperly  allowed  by  a  referee  on  a  running  account, 
and  no  objection  is  made  for  that  reason,  the  judgment 
will  not  be  reversed.® 

There  are  cases,  of  pure  damages,  where  the  question 
of  allowance  of  interest  is  left  to  the  discretion  of  the  tri- 
bunal, whether  the  jury  or  court. ^ 

'  Slnd.  154  (1851). 

-  Minor  (Ala.)  180  (1823). 

3  07  Ga.  COO  (1881). 

■»  13  Cal.  53G  (1859)  ;  CI  Mich.  28  (1886).  Where  the  verdict  shows 
how  much  of  it  is  principal,  tlie  court  in  Tennessee  "will  enter  jiidij- 
ment  for  the  principal,  if  the  plaintiff  consents,  rather  than  order  a  new- 
trial.    OlTenn.  35  (1891). 

"  1  Specr  (S.  C.)  209  (1843);  IC  S.  C.  587  (1881);  contra,  error  in 
rebate,  96  Ind.  510  (1884). 

«  12  Cal.  479  (1859)  ;  3G  Mich.  149  (1877). 

'  13  Cal.  76  (1859). 

^  17  Cal.  407  (18G1). 

»  118  U.  S.  507  (1886)  ;  1  Cal.  422  (1851). 


PLEADING    AND    PRACTICE.  177 

A  juclgraent  modified  by  the  supreme  court  does  not  pre- 
vent its  drawing  interest  from  tlie  time  of  rendering  judg- 
ment in  the  court  below  ;  ^  but  the  court  below  cannot 
change  the  interest  unless  so  directed.^ 

The  allowance  of  interest  and  costs  in  a  cause  in  admi- 
ralty rests  in  the  discretion  of  the  court  below,  and  its 
action  will  not  be  disturbed  on  appeal.^ 

Where  the  allowance  of  interest  is  in  the  court's  discre- 
tion, the  supreme  court  will  not  revise  the  allowance  unless 
there  is  a  manifest  abuse  of  their  discretion.* 

The  court  can  instruct  a  jury  to  allow  interest  without 
namini:;  the  rate.^ 

The  court  cannot  render  judgment  for  interest  as  damages 
without  the  intervention  of  a  jury  ;^  but  it  can  award  and 
render  judgment  for  contractual  interest,  on  default,  with- 
out a  jury.^ 

The  court  can  ask  the  jury  if  they  have  inchided  interest 
in  their  verdict,  and  if  they  have  not  done  so,  can  send 
them  out  again  to  ascertain  it.^  If  they  have  returned  a 
verdict  for  a  certain  sum  and  "interest  thereon,"  the  court 
can  direct  them  to  retire  and  reckon  the  interest.^ 

If  a  decree  states  the  wrong  date  from  which  interest  is 
to  run,  the  supreme  court  can  correct  it.^*^ 

When  interest  upon  account  is  charged  upon  a  wrong 
principle,  if  no  substantial  damage  is  done  to  either  party 

'  46  Cal.  204  (1873). 
•^  33  Cal.  484  (1867). 
■'  123  U.  S.  349  (1887). 
■•Ol  Tenn.  525  (1892). 
'>  70  Iowa  465  (1886). 
«  Sneed  (Ky.)  2  (1801). 
'  Sneed  (Ky.)  135  (1802). 
«  78  Mich.  195  (1889). 
9  79  Mich.  307  (1890). 
'^  52  N.  W.  Rep.  (Mich.)  73  (1892) 
12 


178  THE    LAW    OF    INTEREST. 

the  court  -will  not  disturb  it.^  So,  if  interest  has  errone- 
ously been  included  in  a  judgment,  and  it  can  be  separated 
from  thei)rincipal,  the  supreme  court  will  not  direct  a  new 
trial,  but  order  the  proper  correction  to  be  made.-  But  if 
the  principal  cannot  be  separated,  a  new  trial  will  be  grant- 
ed.^ Where  a  judgment  is  made  to  cover  interest  and  there 
are  no  data  to  show  how  much  is  due,  the  tinding  of  the  jury 
is  treated  on  error  as  a  mistrial.* 

A  mistake  in  the  calculation  of  interest  in  a  settlement 
will  be  relieved  in  equity  f  but  a  party  cannot  complain  of  a 
mistake  in  the  amount  of  interest  due  in  his  own  favor.^ 

It  is  held  in  Tennessee  that  the  court  may  calculate  the 
interest  if  there  is  no  objection.^ 

Whether  interest  should  be  allowed  in  a  given  case  is 
generally  a  matter  of  law  for  the  court, ^  to  be  given  to  the 
jury  in  the  charge. 

In  Texas,  it  is  held  that  the  court  cannot  add  interest  to 
a  verdict  found  by  the  jury,  unless  it  follows  as  an  incident, 
as  on  a  note,  and  not  where  the  amount  is  uncertain.'^ 

A  verdict  "in  full  of  all  claims"  excludes  the  addition  of 
interest  on  it  to  the  day  of  trial. ^° 

(Jj)  Province  of  tliejury.  In  absence  of  contrary  proof, 
it  is  presumed  that  the  jury,  or  those  who  award  the  ver- 
dict, reckoned  the  interest  into  the  amount  of  damaires  they 


'Phil:  Eq.  (X.  C)  116  (1867). 

-  93  N.  C.  550  (1881). 

3  1  Brev.  (S.  C.)  403  (180i). 

*38  Mich.  GOO  (1878). 

"  10  Mo.  457  (1852). 

«  15  Xev.  452  (1880). 

^80Tenn.  323  (1883). 

''SStrob.  (S.  C.)  439  (1849). 

»  17  Tex.  408  (1856);  05  Tex.  137  (1885). 

'"35  Tex.  427  (1871). 


PLEADING   AND   PRACTICE.  179 

find,  it  being  an  element  of  damage  ;^  which  they  can  do 
if  they  wish.^  The  affidavits  of  jurors  are  receivable  to 
show  whether  or  not  interest  is  included  in  their  verdict.^ 
If  the  jury  fails  to  fix  the  rate  of  interest,  the  court  cannot 
enter  judgment  for  it.*  If  they  give  the  rate  it  should  be 
included    in  the  judgment.^ 

A  verdict  for  a  specified  sum,  "with  interest  thereon  from 
16th  Feb.,  1836,"  is  not  void  for  uncertainty,  either  as  to 
principal  or  interest.^ 

Though,  upon  a  liquidated  claim  interest  can  be  recov- 
ered from  the  time  when  the  cause  of  action  accrued,  upon 
an  unliquidated  counter-claim  thereto,  accruing  at  the  same 
time,  interest  is  recoverable  only  from  the  date  of  service 
of  the  answer.^ 

When  a  suit  is  brought  on  a  demand  bearing  interest,  and 
the  defendant  pleads  in  set-ofFa  note  not  bearing  interest, 
the  plaintitl*  is  entitled  to  calculate  interest  on  the  whole 
demand  up  to  verdict.^  Where  the  demand  does  not  bear 
interest,  and  the  defendant  pleads  a  note  bearing  interest 
in  set-oflT,  the  jury  must  give  interest  on  the  note  in  set-ofi" 
up  to  the  time  of  the  verdict,''  although  the  subject  of  the 
suit  does  not  bear  interest. 

In  an  appeal  from  an  award  of  commissioners  allowing 
damages  for  land  taken  for  a  park,  it  is  not  error  for  the 

'  22  Iowa  49  (1867)  ;  3G  Iowa  121  (1872) ;  4  Kas.  36  (1866) ;  28  Kas. 
390  (1882);  5  Mart.  N.  S.  (La.)  448,  457  (1827);  7  Mart.  N.  S.  (La.) 
224,  263  (1828)  ;  3  La.  486  (1832)  ;  4  La.  Aun.  6  (1849)  ;  contra,  16  S.  C. 
587  (1881). 

^^33  Iowa  422,  502  (1871). 

3  61  Iowa  693  (1883). 

*  25  Kas.  83  (1881). 

^25  Kas.  117  (1881). 

«  1  McM.  (S.  C.)429  (1840). 

^77  Wis.  548  (1890). 

8  1  N.  &  McC.  (S.  C.)  24  (1817). 

9  4  Rich.  (S.  C.)  600  (1851). 


180  TIIF.    LAW    OF    INTEREST. 

jury  to  add  interest  to  the  value  of  the  land  from  the  time 
of  the  assessment.^  It  is  in  their  discretion.  If  the  jury 
does  not  bring  in  more  damages  than  the  award  gives,  no 
interest  should  be  allowed  on  the  award,  the  owner  being 
the  cause  of  the  delay.-  But,  otherwise,  if  the  comity  aj)- 
peals,  either  alone  or  with  the  oAvner.''  If  the  county  pays 
before  the  verdict  interest  to  that  time  only  should  be 
allowed.* 

A  jury  may  in  their  discretion  allow  interest  on  a  par- 
tial loss  under  a  policy  of  insurance.''  So,  in  an  action  of 
trespass  to  real  property."  So,  on  wages,  Avithout  its 
being  expressly  claimed."  The  question  of  allowance  of 
interest  should  be  left  to  the  jury  when  there  is  no  usage, 
no  precise  time  of  payment  fixed,  no  account  rendered,  or 
demand  made,  says  the  court  in  Pennsylvania.^ 

In  an  action  of  debt  on  a  single  bill  for  a  certain  sum, 
the  jury  may  be  charged  to  add  interest;^  and  in  their 
discretion  they  may  give  interest,  from  the  beginning  of 
the  action,  on  damages  for  injuries  to  person  and  prop- 
erty,^°  and  the  court  may  so  charge  the  jury.  In  such  cases 
the  court  should  not  charge  the  jury  to  give  interest,  says 
the  Iowa  court. ^*  The  court  in  California  has  recently 
decided  that  thejur}'  cannot  give  interest  on  daniages  that 
are  unliquidated  and  uncertain. ^'- 

'  4  Zab.  (N.  J.)  47  (1853). 
-8  Vr.  (N.  J.)  222  (1874). 
'  8  Vr.  (N.  J.)  222  (1874). 

*  1  Harr.  (N.  J.)  2G5  (1837). 

*  1  Johns.  (N.  Y.)  315  (1806). 
«9GN.  Y.  477  (1884). 

'  Gl  Ga.  482  (1878). 

«  12  S.  &R.  (Pa.)  393  (1825). 

9  2  Mill  (S.  C.)  G8  (1818). 

•»  10  Rich.  (S.  C.)  382  (1857)  ;  34  Wis.  139  (1874). 
"  53  N.  W.  Rep.  (Iowa)  421  (1892). 
'2  32  PflC.  Rep.  (Cal.)  514  (1893). 


PLEADING   AND   PRACTICE.  181 

Where  a  jury  does  not  give  interest  on  a  bond,  which 
they  ought  to  have  done,  the  plaintiff's  remedy  is  by 
appeal,  says  the  South  Carolina  court. ^ 

In  cases  where  damages  are  not  capable  of  exact  meas- 
urement, the  jury  may  resort  to  the  calculation  of  interest 
in  the  jury  room,  but  the  verdict  must  be  for  a  fixed  sum.'- 

(c)  Province  of  the  clerk.  The  clerk  of  the  court  must 
include  interest  in  the  judgment  from  the  time  of  the 
verdict;^  notwithstanding  the  ftict  that  the  jury  may  have 
included  it  in  their  verdict  in  an  action  for  personal  in- 
juries causing  death,  says  the  New  York  court. ^  Interest 
on  the  debt  must  be  included  in  the  judgment  when 
rendered  to  be  collected.^  In  entering  judgment  on  notes, 
interest  should  be  added  to  the  principal  to  the  time  of  the 
judgment,  and  then  entered  for  the  gross  sum.^  When  a 
verdict  is  rendered  for  a  certain  sum  and  interest  thereon, 
the  interest  is  to  be  computed  from  the  maturity  of  the 
contract.^ 

A  statutory  provision  that  judgments  shall  draw  interest 
from  the  day  of  their  entry  until  they  are  satisfied  includes 
a  judgment  for  costs. ^ 

(cZ)  JEvidence.  If  a  promise  to  pay  interest  is  stated 
in  the  declaration,  an  express  promise  must  be  proved,^  in 
an  action  of  indebitatus  assumpsit;  and  if  a  written  con- 


'  10  Rich.  (S.  C.)  217  (1857). 

=  3  Strob.  (S.  C.)  439  (1849). 

3  82  Cal.  184  (1889)  ;  91  N.  Y.  GGl  (1883).  From  verdict  to  time  of 
actual  entry  of  judgment,  62  Iowa  433  (1883)  ;  if  the  verdict  does  not 
give  it,  87  Va.  2G9  (1891). 

^91N.  Y.  661  (1883). 

5  30  Cal.  78  (1866). 

6  5  Cal.  416  (1855) ;  12  W.  Va.  143  (1877)  ;  14  W.  Va.  737  (1879). 
^  81  (Ga.)  93  (1888). 

8  32  Pac.  Kep.  (Col.)  615  (1893). 

9  IMass.  31  (1804). 


182  THE    LAW    OF    INTEREST. 

tract  does  not  cull  for  interest,  it  cannot  be  claimed  hy 
})art>l  evidence.^ 

If  an  instrument  set  out  in  the  })leadings  does  not  men- 
tion interest,  while  the  instrument  introduced  in  the  evi- 
dence does  at  a  certain  rate,  it  is  held  to  be  no  material 
variance. - 

It  can  be  shown  by  oral  testimony  that  a  note  due  at  a 
specified  time  was  not  to  bear  interest  after  it  was  due.^ 
So,  an  oral  contract  to  change  the  rate  of  interest  after 
the  mortgage  matures  and  to  pay  it  semi-annually  instead 
of  annually  is  valid.*  Parol  evidence  is  also  admissi- 
ble to  rebut  an  equity^  against  an  execution  arising  out  of 
an  obligation  to  invest  funds  so  as  to  make  interest.^ 

In  England,  interest  is  not  recoverable  on  a  bill  of  ex- 
change unless  the  instrument  is  produced,  that  is,  after 
maturity.'' 

(e)  Foreign  laio  and  contracts.  Tlie  court  cannot 
judicially  know  the  rate  of  interest  of  another  country,  it 
must  be  alleged  ^  and  proved  as  a  fact  by  the  best  evi- 
dence.^ A  judgment,  therefore,  for  interest  on  a  note 
made  in  another  state  is  erroneous,  unless  the  rate  of  in- 
terest of  the  place  is  proved  f  so  the  court  of  Texas  de- 
cided in  1846.  But  the  same  court  in  later  times  holds, 
that,  if  the  foreign  law  is  not  averred  and  proved,   the 


'  2  Mart.  (La.)  78  (1811). 

^  Mor.  (Iowa)  106  (1840). 

3  79  Ky.  277  (1881). 

•«  12  Stew.  (N.  J.)  376  (1885). 

5  2  Hill  Ch.  (S.  C.)  146  (1835). 

«Ry.  &M.  (Eng.)  145  (1824);  15  Q.  B.  (Eng.)  26  (1850);  14  Jur. 
(Eng.)  372  (1850)  ;  19  L.  J.,  Q.  B.  (Eng.)  203  (1850). 

'  2  Tex.  189  (1847)  ;  5  Tex.  87,  262  (1849)  ;  10  Tex.  350  (1853)  ;  14 
Tex.  351  (1855). 

8  1  Tex.  93  (1846). 

»  1  Tex.  9  (1846). 


PLEADING    AND   PRACTICE.  183 

court  will  presume  it  to  be  the  same  as  that  of  the  forum 
and  give  interest  accordingly.^     See  page  190. 

(/)  Miscellaneous  decisions.  A  judgment  debtor  is 
not  liable  for  interest  on  costs  where  payment  is  delayed 
by  error  proceedings.'^ 

In  excepting  to  the  rate  of  interest  allowed  by  a  mas- 
ter, it  must  be  done  particularly  and  not  under  a  general 
exception  to  the  allowance  of  interest.^ 

Judgment  nuncjpro  tunc  should  he  given  with  interest 
from  the  time  judgment  ought  to  have  been  entered.* 

Interest  given  by  a  judgment  forms  a  part  of  it,  and 
must  be  secured  in  an  appeal  bond,  which  together  form 
the  judgment  of  the  court  appealed  from.^ 

The  rate  to  be  recovered  by  the  plaintiff  should  be 
stated  in  the  judgment,^  says  the  Kentucky  court. 

Interest  runs  during  an  appeal.^ 

Where  a  defendant  (in  an  action  before  a  justice  of  the 
peace)  offers  a  certain  sum  and  costs,  it  is  presumed  to 
carry  interest ;  ^  that  is,  that  it  may  equal  a  subsequent 
judgment  bearing  interest  from  at  least  the  time  of  the 
offer. 

Where  an  action  of  debt  is  brought  on  a  judgment,  in- 
terest thereon  is  recoverable  on  the  accumulated  sum  of 
the  original  principal  and  interest  and  costs. ^ 

Interest  cannot  be  recovered  on  judgments  on  scire 
facias?^ 

Interest  on  judgments  can  only  be  collected  where  the 

'  31  Tex.  Gl  (18C8) ;  52  Tex.  396  (1880). 

2  31  Neb.  8i6  (1891). 

^  129  Mass.  517  (1880). 

^20  Iowa  41  (18C5). 

^2  La.  85  (1830). 

«  2  Bibb  (Ky.)  99  (1810). 

'24  Pa.  St.  391  (1855). 

«39  Pa.  St.  Ill  (18G1). 

9  2  Brev.  (S.  C.)  99  (180G) ;  7  Leigh  (Va.)  346  (1836). 

'"  2  Mill  (S.  C.)  146  (1818)  ;  1  McC.  (S.  C.)  171  (1821). 


184  THE    LAW    OF    INTEREST. 

orisfinal  cause  of  action  bore  interest,  says  the  South  Caro- 
lina court. ^  But,  in  an  action  of  debt  on  a  judgment, 
interest  is  recoverable  thereon,  whether  the  original  cause 
of  action  bore  interest  or  not.'-  See  chapter  three,  page 
102,  for  a  fuller  statement  of  the  law.  Where  interest  is 
rentlered  on  a  previous  judgment  which  bore  interest, 
interest  must  be  calculated  on  the  principal  sum  of  the  lirst 
jutlginent.^ 

AVhere  interest  is  due  from  certain  dates  which  are 
not  shown  in  the  evidence,  it  will  be  allowed  from  the  date 
of  the  writ  only.^ 

AA'here  a  note  is  payable  on  time,  with  interest  from 
date  if  not  punctually  paid,  the  back  interest  is  recovera- 
ble as  stipulated  damages ;  and  if,  in  entering  up  judg- 
ment, such  interest  is  not  computed,  the  judgment  may 
be  amended,  though  the  original  execution  had  issued 
and  been  returned  satisfied.^ 

In  computing  the  days  of  grace  allowed  on  a  bond  for 
the  payment  of  interest,  the  day  when  the  interest  be- 
came payable  will  be  excluded." 

Although  the  discount  claimed  by  the  defendant  in  a 
building  contract  may  reduce  the  amount  covenanted  to  be 
paid,  yet  it  does  not  impair  the  claim  for  interest  on  the 
balance,  when  adjusted  by  the  verdict  of  the  jury. ^ 

Nothing  is  left  on  a  judgment  obtained  I)y  default,  but 
to  compute  interest  in  order  to  entitle  the  plaintifl'  to  his 
judgment.® 

An  action  of  special  assumpsit,  on  a  warranty  of  sound- 

'  3  McC.  (S.  C.)  IGG  (1825)  ;  Rice  (S.  C.)  21  (1S38). 

-  1  Hill  (S.  C.)  79  (1833). 

••'2  Hill  (S.  C.)343  (1834). 

••  7G  Iowa  707  (1888). 

"  1  Kelley  (Ga.)  4G7  (184G). 

«  24  Atl.Rep.  (N.  J.)  3G9  (1892). 

^2  Speer(S.  C.)  536  (1844). 

"2  Speer  (S.  C.)  573  (1844). 


PLEADING    AND    PEACTICE.  185 

ness,  for  damages,  says  the  South  Carolina  court,  is  sub- 
iect  to  the  rule  governing  actions  sounding  in  damages 
that  interest  is  not  recoverable  eo  nomine,^  but  must  be 
given  as  damages. 

In  equity,  interest  is  not  carried  beyond  the  date  of  the 
final  decree.^ 

"When  the  clerk,  on  assessing  the  plaintifl's  damages, 
over-calculates  the  amount  of  interest,  the  plaintiff  may 
without  notice  or  rule,  obtain  leave  to  enter  a  remittitur 
for  the  excess,  or  may  himself,  Avithout  an  order,  enter 
such  remittitur  on  the  judgment  and  execution.^ 

Where,  on  appeal  from  a  judgment  for  personal  injuries, 
the  only  error  is  in  the  allowance  of  interest  on  the  amount 
recovered  for  the  time  prior  to  the  judgment,  the  supreme 
court  will  affirm  the  judgment  on  condition  that  the  appel- 
lee remit  the  amount  allowed  as  interest,  says  the  Tennes- 
see court.* 

Where  a  plaintiff  is  entitled  to  interest  on  an  amount 
due  him  from  the  commencement  of  the  action,  he  may 
include  such  interest  in  a  judgment  taken  by  default,  al- 
though the  damages  were  unliquidated  and  the  interest  was 
not  specifically  demanded  in  the  complaint.^ 

III.    EFFECT   OF   INTEREST    ON   JURISDICTION    OF    COURT. 

The  jurisdiction  of  a  court  having  original  jurisdiction 
is  determined  by  the  amount  claimed,  whether  it  is  prin- 
cipal alone  or  principal  and  interest  combined.^     It  is  op- 

'  2  Speer  (S.  C.)  594  (1844). 

2  3  Call  (Va.)  22  (1801). 

^  14  Rich.  (S.  C.)  63  (18GG). 

"  91  Tenn.  35  (1891)  ;  17  S.  W.  Rep.  (Tenn.)  882  (1891). 

5  68  Wis.  61  (1887). 

6  45  Pa.  St.  235  (1863)  ;  2  N.  &  McC.  (S.  C.)  487  (1820)  ;  contra,   60 
Cal.  653  (1882)  ;  28  Vt.  565  (1856). 


136  THE    LAW    OF    INTEREST. 

tioiial  with  the  plaintiff,  whether  or  not  to  claim  interest, 
either  the  whole  or  a  part.^ 

The  tc^t  of  the  appellate  jurisdiction  of  the  United  States 
supreme  court  is  the  principal  and  interest  computed  to 
the  time  of  the  judgment  in  the  court  below,  added  to- 
gether.^ 

If  the  claim  is  not,  at  the  time  of  the  appeal,  large 
enough  to  give  jurisdiction  to  the  appellate  court,  the 
subsequent  accruing  of  interest  will  not  aid  it.^ 

IV.    RECOVERY    OF    INTEREST    PAID    BY   MISTAKE. 

Excess  of  interest  paid  by  mistake  cannot  be  recovered  ;* 
but,  if  it  is  paid  when  none  is  due  it  can  be.^ 

Interest  paid  under  a  mistake  of  fact  may  be  recovered  f 
but  usury  cannot  be,  in  absence  of  statute,'^  as  it  is  usually 
a  mistake  of  law,  if  a  mistake  at  all.^ 

Compound  interest  paid  through  error  of  f:ict  can  also 
be  recovered  ;^  whether  the  error  be  made  l)y  the  one  pay- 
ing the  interest  or  by  some  other  person  whom  he  trusted 
to  make  the  calculation. ^° 

1  45  Pa.  St.  235  (18G3)  ;  contra,  2  N.  &  McC.  (S.  C)  487  (1820). 

"-  133  U.  S.  GIO  (1889)  ;  137  U.  S.  689  (1891). 

3  10  Conn.  34  (1843). 

^  4G  Ark.  1G7  (1885)  ;  59  Vt.  75  (188G). 

^59  Vt.  75  (1886). 

6  84Ky.  306  (1886). 

■>  102  N.  C.  137  (1889). 

8  16  O.  St.  418  (1865). 

9  14  La.  Ann.  10  (1859). 

>»  2  Denio  (N.  Y.)  107  (1846). 


CHAPTER  IX. 

CONFLICT  OF  LAWS. 

WHEN  laws  of  different  places  and  dates  conflict  it 
is  often  difficult,  especially  in  interest,  to  decide 
which  should  govern. 

I.     LAW    OF    WHAT   PLACE    GOVERNS. 

(a)  Generally.  Interest  will  be  allowed  upon  debts 
contracted  abroad,  if  the  lex  loci  contractus  authorizes  it, 
as  well  as  upon  those  contracts  made  in  the  state  where  the 
suit  is  brought.^  Contractual  interest  and  the  legal  rate 
per  cent  are  governed  by  the  law  of  the  place  of  perform- 
ance of  the  contract.^ 


17  Port.  (Ala.)  110  (1838). 

2  2  Burr.  (Eng.)  1094  (17G0)  ;  1  W.  Bl.  (Eng.)  267  (1760)  ;  2  Sim. 
(Eng.)  194  (1828);  2  Beav.  (Eng.)  282  (1840);  9  Esch.  (Eng.)  25 
(1853)  ;  17  Jur.  (Eng.)  820  (1853)  ;  1  Wash.  (U.  S.,  C.  C.)  521  (1806)  ; 
2  Wash.  (U.  S.,  C.  C.)  253  (1808)  ;  3  Wheat.  (U.  S.)  101  (1818)  ;  4  Wash. 
(U.  S.,  C.  C.)  290  (1822)  ;  10  Wheat.  CU.  S.)  307  (1825)  ;  13 Pet.  (U.  S.) 
65  (1839) ;  3  McLean  (U.  S.,  C.  C.)  268  (1843)  ;  1  WaU.  (U.  S.)  298 
(1863);  93  U.  S.  344  (1876);  96  U.  S.  51  (1877);  Minor  (Ala.)  387 
(1825);  4  Port.  (Ala.)  128  (1836);  7  Port.  (Ala.)  Ill  (1838);  8  Port. 
(Ala.)  250  (1839) ;  9  Port.  (Ala.)  9  (1839)  ;  10  Ala.  773'  (1846)  ;  12  Ala. 
54  (1847)  ;  18  Ala.  209  (1850)  ;  37  Ala.  702  (1861)  ;  02  Ala.  518  (1878)  ; 
81  Ala.  240  (1886)  ;  33  Conn.  419,  570  (1866)  ;  21  Ga.  135  (1857)  ;  17 
Ind.  77  (1861)  ;  18  Ind.  246  (1862)  ;  19  Ind.  223  (1862)  ;  72  Ind.  567 
(1880)  ;  112  Ind.  435  (1887)  ;  11  Iowa  1  (1860)  ;  1  Mar.  (Ky.)  254,  397 
(1818)  ;  Lit.  Sel.  Cas.  (Ky.)  507  (1821)  ;  4  J.  J.  Mar.  (Ky.)  238  (1830)  ; 

(187) 


188  THE    LAW    OF    INTEREST. 

Some  courts  hold  that,  -whether  or  not  interest  as  tlam- 
a<^es  shall  be  allou'ctl,  and  also  the  rate,  the  lexfori^  or 
law  of  the  place  whore  the  contract  is  sought  to  ])e  en- 
forced governs.^ 

If  no  place  of  performance  is  shown  to  the  court  it  Avill 
he  presumed  that  the  contract  is  payable  in  the  jurisdiction 
where  it  was  made  ;-  and  if  a  note  states  on  its  face  that 
it  is  payable  in  A,  it  will  be  presumed  that  A  is  in  the 
state  where  the  suit  is  brought.^     These  presumptions  are 

I  B.  Mon.  (Ky.)  2D  (1840)  ;  6  Bush  (Ky.)  GOO  (18G9)  ;  13  La.  91  (1839)  ; 
3  La.  Aun.  88,  401  (1848);  12  La.  Ann.  815,  817  (1857);  12  Mass.  4 
(1815) ;  2  Met.  (Mass.)  8  (1840)  ;  11  Met.  (Mass.)  210  (184G)  ;  11  Gray 
(Mass.)  38  (1858);  126  Mass.  360  (1879);  12  Miss.  (4  S.  &  M.)  667 
(1845)  ;  57  Miss.  308  (1879)  ;  19  Nev.  121  (1885)  ;  43  N.  H.  109  (1861)  ; 
47  N.  H.  405  (1867)  ;  15  N.  J.  L.  (3  Green)  328  (1836)  ;  17  N.  J.  L.  (2 
Har.)  185  (1839);  4  Johns.  (N.  Y.)  183  (1809);  3  Johns.  Ch.  (N.  Y.) 
587  (1818)  ;  17  Johns.  (N.  Y.)  511  (1820)  ;  2  Paige  (N.  Y.)  604  (1831)  ; 
6  Paige's  Ch.  (N.  Y.)  627  (1837)  ;  22  Barb.  (N.  Y.)  118  (1856)  ;  62  N.  Y. 
151  (1875)  ;  79  N.  Y.  136  (1879)  ;  Bat.'s  Mart.  &  2d  Ilay'd  (N.C.)  149 
(1797);  5Ircd.  L.   (N.  C.)  590  (1845);  7  Ired.  L.  (N.  C.)  424  (1847); 

II  Ired.  L.  (N.  C.)  303  (1850)  ;  7  Jones  L.  (N.  C.)  506  (1860) ;  94  N.  C. 
286  (1886)  ;  2  W.  &  S.  (Pa.)  327  (1841)  ;  2  Pa.  St.  85  (1845)  ;  2  Grant's 
Cas.  (Pa.)  73  (1853)  ;  1  N.  &  McC.  (S.  C.)  67  (1818) :  10  Tex.  350 
(1853)  ;  21  Tex.  77  (1858)  ;  22  Tex.  109  (1858)  ;  23  Vt.  286  (1851). 

>  2  Beav.  (Eng.)  282  (1840)  ;  3  Wheat.  (U.  S.)  101  (1818) ;  17  Wall. 
(U.  S.)  123  (1872);  137  U.  S.  689  (1891);  1  Cal.  422  1851);  1  Root 
(Conn.)  314  (1791)  ;  112  Ind.  435  (1887)  ;  15  Gray  (Mass.)  178  (1860)  ; 
105  X.  Y.  670  (1887)  ;  conlra,  16  La.  58  (1840) ;  19  Nev.  121  (1885).  The 
court  in  13  La.  91  (1830)  says  that  tlie  place  of  performance  governs 
the  rate  of  interest  after  maturity.  Indian  interest  Avas  allowed  on  a 
tort  committed  in  India.      1  P.  Wm.  (Eng.)  395  (1717). 

«11  Yes.  (Eng.)  314  (1805);  1  Wash.  (U.  S.,  C.  C.)  521  (1806);  2 
Wash.  (U.  S.,  C.  C.)  253  (1808) ;  3  Wheat.  (U.  S.)  101  (1818) ;  3  Conn. 
253(1830);  IB.  Mon.  (Ky.)  29  (1840);  12  Mass.  4  (1815);  11  Met. 
(Mass.)  210  (1846)  ;  47  N.  H.  405  (18G7)  ;  2  Ilarr.  (N.  J.)  185  (1839); 
1  Paige's  Ch.  (N.  Y.)  220  (1828)  ;  2  Paige  (N.  Y.)  604  (1831)  ;  22  Barb. 
(N.  Y.)  118  (1856)  ;  02  N.  C  266  (1885)  ;  14  Vt.  33  (1812)  ;  32  Vt.  93 
(1859). 

^  Minor  (Ala.)  167  (1823)  ;  11  Ala.  270  (1847)  ;  4  Tex.  420  (1849). 


CONFLICT    OF    LAAVS.  189 

o\\\j  prima  facie, ^  however,  and  parol  evidence  is  admis- 
sible to  show  that  the  contracts  are  payable  elsewhere." 

The  location  of  property  given  to  secure  notes,  etc., 
has  no  effect  upon  the  question  of  what  place  governs  in 
case  of  a  conflict  of  law,  as  regards  the  allowance  of  inter- 
est, it  being  decided  as  though  there  were  no  security.^ 

If  the  rate  is  good  and  legal  where  the  interest  is  stip- 
ulated  to  be  paid,  it  is  good  and  valid  everywhere ;  and  if 
it  is  illegal  there  it  is  illegal  everyw^here.* 

The  parties  to  a  contract  made  in  one  state  and  pay- 
able in  another,  may,  however,  stipulate  for  the  rate  of 
interest  of  either  place,  if  it  is  done  in  good  foith,  and  not 
as  a  cover  for  usury ,^  although  in  the  place  other  than  the 
one  whose  rate  is  agreed  upon  it  may  be  an  illegal  rate.^ 

In  a  certain  case,  where  an  agent  in  California  retained 
the  proceeds  of  sales  of  goods,  Avhich  he  was  to  send  to 
his   principal  in  New  York,  it  was  decided  by  the  New 

'  2  Atk.  (Eng.)  382  (1742)  ;  18  Ala.  209  (1850)  ;  14  Vt.  33  (1842)  ; 
contra,  5  Ired.  L.  (N.  C.)  590  (1845)  ;  7  Jones  L.  (N.  C.)  50G  (18G0). 

2  18  Ala.  209  (1850)  ;  14  Vt.  33  (1842)  ;  23  Vt.  286  (1853)  ;  contra^ 
5  Ired.  L.  (N.  C.)  590  (1845) ;  7  Jones  L.  (N.  C.)  506  (1860),  which  de- 
cide  that  the  parties  must  be  presumed  to  have  had  the  place  of  pay- 
ment in  view  "when  the  contract  was  made. 

3  36  Ark.  569  (1880)  ;  2  Day  (Conn.)  280  (1806)  ;  11  Ind.  117  (1858)  ; 
Quincy  (Mass.)  9  (1762);  1  Halst.  CIi.  (N.J.)  17  (1845),  631  (1847); 
2  Beas.  (N.  J.)  253  (1861)  ;  1  McCart.  (N.  J.)  56  (1861),  355  (18G2)  ;  5 
C.  E.  Gr.  (N.  J.)  288  (1869)  ;  1  Keyes  (N.  Y.)  347  (1864)  ;  53  Barb. 
(N.  Y.)  350  (1867);  37  How.  Pr.  (N.  Y.)  181  (1867);  37  N.  Y.  444 
(1868)  ;  64  How.  Pr.  (N.  Y.)  503  (1881)  ;  7  O.  St.  387  (1851)  ;  10  K.  I. 
393  (1873)  ;  contra,  2  Atk.  (Eng.)  .382  (1742). 

■•  16  Ind.  475  (1861). 

5  10  Wheat.  (U.  S.)  367  (1825)  ;  13  Pet.  (U.  S.)  65  (1839)  ;  1  Wall. 
(U.  S.)  298  (1863)  ;  96  U.  S.[51  (1877)  ;  85  Mich.  561  (1891)  ;  46  N.  H. 
300  (1865)  ;  60  N.  H.  452  (1881)  ;  26  Barb.  (N.  Y.)  208  (1857);  2  Pa.  St. 
85  (1845)  ;  14  Vt.  33  (1842)  ;  12  Wis.  692  (1860)  ;  13  Wis.  198  (1860). 
See  2  Johns.  Cas.  (N.  Y.)  355  (1801)  and  the  citations  under  usury, 
page  191. 

6  60  N.  H.  452  (1881). 


190  THE    LAW    OF   INTEREST. 

York  court  that  California  law  should  govern  as  to  the  rate 
per  cent  of  the  interest.^ 

Pradice.  Upon  foreign  contracts  interest  according  to 
the  law  of  Wiq  forum  will  l)c  decreed  if  the  foreign  law  is 
not  pleaded  and  proved,  and  there  is  no  agreement  as  to 
interest.^  The  court  cannot  judicially  know  the  foreign 
rate  of  interest.^ 

Interest  cannot  be  allowed  on  a  contract  made  al)r()ad 
on  proof  that  it  is  customary  there,  without  showing  that 
it  is  legal  also.* 

The  court  in  Mississippi  decided  that  in  absence  of  proof 
of  the  rate  per  cent  of  another  state,  the  finding  of  the 
jury  should  be  presumed  to  be  correct.^ 

The  place  named  with  the  date  of  a  contract  is  evidence 
of  the  place  where  it  was  made.^ 

Legacies.  The  law  of  the  place  where  the  estate  is 
beinir  settled  o-overns  in  legacies.^ 

(6)  Usury.  When  a  contract  is  usurious,  but  the  law 
of  the  state  where  it  is  made  does  not  avoid  it  on  that 
ground,  but  only  afi'ects  the  remedy  upon  it,  the  courts  of 
other  states  can  enforce  the  contract,  but  only  by  those 
remedies  afforded  by  their  own  law.^ 


'  47  Barb.  (N.  Y.)  9  (186G). 

2  18  Ind.  240  (1862)  ;  13  Mo.  462  (1850)  ;  16  N.  H.  134  (1844)  ;  31  Tex. 
61  (1868)  ;  52  Tex.  396  (1880).  The  earlier  Texas  cases  decided  that 
unless  the  foreign  law  of  interest  "was  averred  and  proved  the  court 
should  not  allow  any  interest,  notwithstanding  a  verdict  for  interest 
had  been  returned.  1  Tex.  9  (1846)  ;  2  Tex.  189  (1847)  ;  5  Tex.  87,  262 
(1849)  ;  10  Tex.  350  (1853)  ;  14  Tex.  351  (1855).  The  Louisiana  court 
also  alloAvs  no  interest.     6  Mart.  N.  S.  (La.)  606  (1828). 

••  1  Tex.  9  (1846). 

••  6  Mavt.  N.  S.  (La.)  567  (1828). 

"•o  S.  &M.  (Miss.)  573  (1845). 

•  16  N.  II.  134  (1844). 

'  38  L.  T.,  N.  S.  (Eng.)  215  (1878). 

»  10  Mich.  283  (1862). 


CONFLICT   OF   LAWS.  191 

In  absence  of  other  stipulations  the  place  of  performing 
the  contract  will  govern  ;  and  if  it  is  not  usurious  there 
it  will  not  be  usurious  anywhere,^  unless  the  place  of  pa}^- 
ment  was  inserted  as  a  device  to  evade  the  usury  law,^ 
which  may  be  shown  in  evidence.^  Parties  may  stipulate 
for  interest  at  the  place  of  making  the  contract,  or  the 
place  of  its  performance,  if  it  is  not  done  as  a  cover  for 
usury.*  The  Mississippi  court  holds  that  if  the  rate  named 
is  prohibited  by  the  law  of  the  place  of  performance,  then 
the  place  of  making  the  contract  will  govern.^  If  no  place 
of  payment  is  named,  then  the  place  where  it  was  made 
governs.®     Where  a  loan  is  made  by  a  party  in  one  state 

'  12  Wall.  (U.  S.)  22G  (1870)  ;  11  Ind.  117  (1858)  ;  79  Ind.  172  (1881)  ; 
3  Dana  (Ky.)  497  (1835)  ;  2  La.  lU  (1830)  ;  22  La.  Ann.  418  (1870)  ;  1 
S.  &  M.  (Miss.)  17G  (1843)  ;  11  S.  &  M.  (Miss.)  140  (1848) ;  1  Ilalst.  Ch. 
(N.  J.)  17  (1845),  631  (1847)  ;  5  C.  E.  Gr.  (N.  J.)  288  (18G9)  ;  12  C.  E. 
Gr.  (N.  J.)  3C0  (187G)  ;  1  Taige  (N.  Y.)  220  (1828)  ;  7  Paige  (N.  Y.)  G15 
(1839)  ;  3  Sandf.  Cli.  (N.  Y.)  313  (184G)  ;  5  N.  Y.  (1  Seld.)  178  (1851)  ; 
GN.  Y.  (2  Seld.)  124  (1851);  2G  Barb.  (N.  Y.)  208  (1857);  1  Keyes 
(N.  Y.)  347  (18G4)  ;  53  Barb.  (N.  Y.)  350  (18G7)  ;  37  N.  Y.  444  (1868)  ; 
19  S.  C.  583  (1883)  ;  87  Tenu.  781  (1889)  ;  55  Tex.  167  (1881)  ;  14  Vt. 
33  (1842). 

2  12  Wall.  (U.  S.)  226  (1870)  ;  40  Tenn.  249  (1859)  ;  43  Tenn.  31  (1SG6) . 

'56Tenn.  242  (1877). 

*  13  Pet.  (U.  S.)  G5  (1839)  ;  1  Wall.  (U.  S.)  298  (1863)  5  96  U.  S.  51 
(1877)  ;  2  McArt.  (D.  C.)  371  (1876)  ;  88  Ga.  756  (1891)  ;  15  S.  E.  Rep. 
(Ga.)  812  (1892)  ;  22  Iowa  194  (1867)  ;  8  Mart.  N.  S.  (La.)  1  (1829)  ; 
85  Mich.  561  (1891)  ;  46  N.  IL  300  (1865)  ;  38  Barb.  (N.  Y.)  352  (1862)  ; 
45  Barb.  (N.  Y.)  340  (1865)  ;  25  O.  St.  413)  1874)  ;  39  O.  St.  63  (1883)  ; 
19  S.  C.  583  (1883) ;  40  Tenn.  249  (1859)  ;  43  Tenn.  31  (1866)  ;  45  Tenn. 
497  (1868)  ;  54  Tenn.  607  (1874)  ;  79  Tex.  246  (1891).  The  Wisconsin 
court  holds  that  this  cannot  be  done  if  the  rate  of  interest  of  the  place 
where  the  contract  is  to  be  performed  is  greater  than  that  of  the  place 
of  making  the  contract.  3  P.  78  (3  C.  83)  (Wis.)  (1850) ;  21  Wis.  340 
(1867).  Where  land  held  for  security  lies  in  the  borrower's  state. 
15  S.  E.  Rep.  (Ga.)  812  (1892). 

"  5  Geo.  (Miss.)  181  (1875). 

«  18  Ark.  462  (1857)  ;  26  Ark.  357  (1870)  ;  33  Ark.  645  (1878)  ;  2  McArl. 
(D.  C.)  371  (1876)  ;  5  Geo.  (Miss.)  528  (1857)  ;  37  How.  Pr.  (N.  Y.) 
181  (1867)  ;  88  Pa.  St.  118  (1878)  ;  11  W.  Va.  523  (1877)  ;  20  W.  Va.  140 
C1882)  ;  3  P.  78  (3  C.  83)  (Wis.)  (1850)  ;  21  AVis.  340  (1867). 


192  THE    LAW    OF    INTEREST. 

to  ci  party  in  anotlicr  state,  to  l)c  used  in  the  other  state, 
"which  is  also  the  forum,  the  hiwof  the  hitter  phice  governs.^ 

If  a  note  stipuLates,  that  if  thecontract  is  usurious  in  one 
state,  the  interest  shall  be  reckoned  by  the  law  of  another 
state  it  is  usurious." 

A  deed  of  even  date  with  the  note  and  a  part  of  the 
same  transaction  is  admissible  to  show  the  real  situs  of  the 
contract.'' 

While  the  courts  of  one  state  will  not  enforce  the  penal 
statutes  of  another  state,  yet  when  a  contract  is  made  with 
reference  to  the  laws  of  another  state,  and  is  usurious 
there,  the  forfeiture  provided  by  such  laws  will  be  en- 
forced.* The  court  in  North  Carolina  holds  that  where  an 
usurious  agreement  is  made  there,  but  illegal  interest  re- 
ceived on  it  in  South  Carolina,  an  action  will  not  lie  to 
recover  the  penalty  in  North  Carolina.'^ 

A  foreign  corporation  may  make  a  valid  loan  in  New 
York  at  seven  per  cent  interest,  although  its  charter  is 
granted  by  a  state  Avhercin  interest  is  restricted  to  a  lower 
rate,  and  forbids  it  to  make  any  contract  which,  by  the 
existing  laws,  amounts  to  usury .^ 

It  is  the  intention  of  the  parties  that  rules  as  to  place  ;^ 
the  mere  signing  a  note  in  a  certain  state  not  necessarily 
making  it  })ayablc  there,  if  no  place  of  payment  is  named. ^ 
A  resident  of  Texas,  being  in  New  York,  signed  notes 
there,  dating  them  "Texas,"  no  place  of  performance  be- 
ing designated  ;  and  it  was  held  that  Texas  was  the  place 
of  making,  and  of  payment, — principally  because  the  rate 

"J3U.  S.  344  (187G). 

»  09  Miss.  770  (1892). 

3  88Ga.  7oG  (1891). 

*22IoAval94  (18C7). 

oTay.  Term  (N.  C.)  022  (1810). 

"  12  N.  y.  (2  Kern.)  495  (1855). 

MO  Wis.  333  (18C0). 

8 12  Wis.  092  (1800)  ;  13  Wis.  198  (1800). 


CONFLICT    OF   LAWS.  193 

of  the  notes  was  lawful  in  Texas  and  not  in  Xew  York,^ 
suit  upon  thoni  being  brought  in  Texas. 

All  renewals'-  and  discounts ^  have  the  domicile  of  the 
original  contract.  But  where  a  draft  is  drawn  in  Con- 
necticut, and  made  pa3'able  in  New  York,  where  it  is  also 
accepted  for  the  accommodation  of  the  drawer,  who  nego- 
tiated it  in  Connecticut,  it  is  governed  by  the  laws  of 
Connecticut.'*  An  agreement  f\)r  the  forbearance  of  a  debt 
already  due,  made  in  another  state,  is  governed  by  the 
laws  of  that  other  state. ^ 

While  the  law  of  the  place  of  the  contract  interprets 
and  construes  it,  the  law  of  a  place  Avhere  it  is  put  in  suit 
determines  all  questions  as  to  the  manner  in  which  the 
same  may  l)e  enforced.^' 

JTradice.  The  foreign  law  of  usury  must  be  pleaded 
and  proved  if  suit  is  brouglit  on  a  foreign  contract,  as  the 
court  cannot  judicially  kuow  what  it  is.^  It  will  not  be 
presumed  to  be  the  same  as  the  law  of  the  forum. ^  The 
plea  must  state  the  law  of  the  foreign  state. ^ 

II.    LAW  OF  WHAT   TIME    GOVEUNS. 

The  law  in  force  at  the  time  of  uiaking  a  contract  gov- 
erns as  to  contractual  interest  and  its  conventional  rate  ;'^* 

'35  Tex.  313  (1871). 

»12  0.  St.  GIO  (1861). 

'G  Ljins.  (N.  y.)  455  (1872)  ;  4  Ilun  (N.  Y.)  L';U  ^875). 

M3  llim  (N.  Y.)  40  (1878). 

^87  N.  Y.  430  (1882). 

«  26  Ark.  356  (1870). 

U  W.  V.a.  4  (1870). 

"23  Wis.  383  (1868). 

»  17  Grat.  (Va.)  47  (1861). 

'"  42  Conn.  570  (1875)  ;  44  Coim.  300  (1877)  ;  47  Conn.  418  (1879)  ;  (U 
Ga.  458  (1878)  ;  62  Ga.  86  (1878)  ;  1  Mar.  (Ky.)  254,  397  (1818) ;  Lit. 
Sel.  Cas.  (Ky.)  507  (1821);  4  J.  J.  Mar.  (Ky.)  238  (1830);  6  Bush 
(Ky.)  690  (1869)  ;  4  La.  87  (1832)  ;  12  La.  530  (1838)  ;  3  Vr.  (N.  J.) 
423  (1868);  7  C.  E.  Gr.  (N.  J.)  444  (1871);  11  C.  E.  Gr.  (N.  J.)  456 
(1375)  ;  25  IIuu  (N.  Y.)  159  (1881)  ;  84  N.  Y.  471  (1881). 
13 


194  THE    LAW   OF    INTEREST. 

SO  the  passing  of  a  usury  law  does  not  affect  existing  con- 
tracts;^ but  an  agreement  fixing  the  rate  of  interest  on 
future  dealings  between  the  parties,  terminates  by  the 
passa2:e  of  a  law  making  that  rate  usurious.-  If  the  rate 
is  given  as  "lawful  interest  for  the  time,"  the  rate  will 
vary  with  the  statute.^  If  it  is  interest  that  is  allowed  as 
damages,  or  contractual  interest,  and  no  rate  has  been 
agreed  upon,  it  will  vary  with  the  statutory  rate,  if 
changes  occur  in  that.^  In  actions  for  causing  death  l)y  a 
Avrongful  act,  negligence  or  default,  two  cases  decided  in 
New  York  in  the  same  year  are  apparently  contrary  to 
each  other.  The  court  in  one  of  them,  decided  in  the  court 
of  appeals,  held  that  the  damages  should  bear  interest 
from  the  lime  of  the  injuries  to  verdict  at  the  rate  accord- 
ino;  to  the  law  in  force  at  the  time  of  the  verdict ;  ^  and,  in 
the  other,  the  supreme  court  held  that  the  rate  should  fol- 
low the  statute  from  the  time  of  the  death  to  the  verdict, 
as  in  other  cases. ^ 

Although  the  passage  of  a  usury  law  does  not  affect 
existing  contracts,  yet  a  new  statute,  repealing  an  existing 
usury  law,  does  affect  them,  and  precludes  the  defence  in 
a  suit  then  pending.^  So,  a  forfeiture,  being  in  the  nature 
of  a  penalty,  falls  with  the  repeal  of  the  law  creating  it.^ 
So  a  void  contract  may  be  cured  by  subsequent  legisla- 


1  CA  Ga.  137  (1879)  ;  7G  Ga.  322  (1886)  ;  20  Bradw.  (111.)  53G  (1886)  ; 
7  AUcu  (Mass.)  139  (1863). 

MGeo.  (Miss.)  299(1857). 

^3  Vr.  (N.  J.)  423  (1868). 

*i2  Cal.  279  (1871)  ;  44  Cal.  366  (1872)  ;  46  Cal.  323  (1873)  ;  f.O  Cal. 
244  (1875);  63  Cal.  503  (1883);  49  Couu.  519  (1882).  See  47  Cal.  9 
(1873). 

*86N.  Y.  401  (1881). 

«23IIuu  (N.  Y.)  578  (1881). 

'30  Ark.  135  (1875). 

8  99  111.  188  (1881);  81  Ivy.  129  (1883). 


CONFLICT   OF   LAWS.  195 

tioii ;  ^  that  is,  it  may  be  given  force  and  obligation, — it  does 
not  impair  the  obligation  of  a  contract ;  but  it  does  not 
strictly  give  validity  to  an  usurious  contract  void  under  the 
statute  existing  when  the  contract  was  made.^  The  Wis- 
consin court  holds  that  a  new  statute  cannot  validate  a 
contract  even  for  the  principal  when  the  former  statute 
avoided  it  wholly.^ 

The  change  in  the  statute,  properly,  only  affects  the 
remedy,  and  the  law  in  force  at  the  time  the  remedy  is 
sought  governs  in  usury,*  that  is,  the  defendant  can  or 
cannot  set  up  the  remedy. 

Usury  paid  is  governed  by  the  law  then  in  force,  if  the 
statute  is  directed  toward  the  receipt  of  usurious  interest.^ 
And  a  contract  for  forbearance  is  governed  by  the  law  in 
force  when  it  was  made." 

When  a  contract  was  made,  a  usury  law  existed  ;  the  law 
was  afterward  repealed,'  and  then  reenacted  before  the 
contract  was  sued  on.  It  was  held  that  the  defendant  could 
not  olTset  usury  paid  while  the  statute  was  repealed.^  So, 
interest  paid  while  the  statute  was  in  force,  if  it  continues  in 
force  till  the  suit  is  brought,  may  be  offset.^ 

Money  paid  as  usury  when  the  law  does  not  allow  re- 
coupment can  be  recouped  if  a  statute  is  afterward  passed 
o;ivini2:  that  risjht.^ 

>  99  III.  188  (1881)  ;  7  Blf.  (Ind.)  474  (1845)  ;  8  Blf.  (Incl.)  67  (184G), 
371  (1847)  ;  1  Ind.  32  (1848)  ;  30  Ind.  204  (18G8)  ;  33  Ind.  87  (1870)  ; 
contra,  12  La.  Ann.  221  (1857). 

2  36  Wis.  186  (1874). 

3  18  Wis.  298  (1864). 

"  7  Blf.  (Ind.)  474  (1845)  ;  19  Ind.  C8,  121  (1862)  ;  26  Ind.  338  (1866)  ; 
31  Ind.  389  (18G9) ;  32  Ind.  16  (1869)  ;  39  Ind.  270  (1872)  ;  52  Tenn. 
695  (1875)  ;  contra,  39  Tex.  365  (1873).  See  19  111.  121  (1857). 

*15  0.  St.  218  (1864). 

«  3  C.  E.  Gr.  (N.  J.)  451,  452,  482  (1867). 

'64  Ga.  510  (1880). 

85  lud.  308  (1854). 

9  19  Ind.  68  (1862)  ;  20  Ind.  108  (1863)  ;  55  Ind.  226  (1876)  ;  83  Ind. 
204  (1882). 


196  THE    LAW    OF    INTEREST. 


The  repeal  of  a  usury  statute  does  not  revive  a  former 


one. 


jSfovation.  A  third  party  may  contract  to  be  substituted 
as  debtor  in  the  phice  of  another  ;  and  if  such  substitution 
is  made,  the  new  debtor  may  lawfully  contract  to  pay  the 
rate  of  interest  which  the  debt  l)ears,  notwithstanding  it 
may  be  higher  than  the  rate  then  allowed  by  law.-  So 
bills  of  exchange  given  after  the  usury  statute  was  repealed, 
in  renewal  of  usurious  bills,  given  before  the  usury  law 
was  in  force,  are  valid. ^ 

'  3  N.  M.  327,  344  (18SG). 

=  4  Cush.  (Miss.)  13  (1853) ;  2  Geo.  (Miss.)  2G0  (1856). 

n  H.  &C.  (Eng.)  703  (1SG3);  9  Jnr.,  N.  S.  (Eng.)  1016  (1863);  32 
L.  J.,  Exch.  (Eng.)  265  ^863)  ;  11  W.  11.  (Eug.)  1019;  8  L.  T.,  N.  S. 
(Eug.)  638  (1863). 


CHAPTER  X. 

USURY. 

EVERY  state  has  a  fixed  rate  per  cent  at  -which  intei- 
est,  whether  it  is  contractual  interest,  or  interest 
allowed  as  damages,  shall  be  reckoned,  provided  no  other 
rate  has  been  agreed  upon  ;  and,  the  majority  of  the  states 
have  passed  laws  fixing  the  maximum  limit  of  the  rate 
per  cent  for  which  interest  can  be  contracted  ;  and  inter- 
est contracted  for  or  paid  above  that  amount  is  called 
usury.  In  this  chapter,  the  term  "legal  rate"  generally 
means  the  maximum  le£:al  rate. 

In  very  early  times  it  was  found  necessary  to  curb  the 
weakness  of  men  for  gain,  and  from  the  accumulated 
experience  of  centuries  it  was  deemed  best  for  the  pub- 
lic's interest  to  limit  the  amount  that  men  should  i)ay  for 
the  use  of  money. ^  The  industrious,  enterprising  and 
producing  classes  of  men  are  to  be  protected  from  the 
greed  of  those  who  hold  the  money.  All  kinds  of  busi- 
ness require  capital  in  their  prosecution,  and  if  left  free 
to  charge  what  they  would  for  the  use  of  money,  the  hold- 
ers of  it  would  discourage  all  enterprise.  This  is  the  view 
that  Lord  Bacon  took  of  the  matter,  and  there  is  scai'cely  a 
nation  that  has  not  regarded  it  in  a  similar  light.  The 
Romans  found  that  the  extremes  the  law  could  reach  re- 
specting interest,  that  is,  no  interest  and  unlimited  inter- 

'  3Gilm.  (111.)  547  (1846). 

(197) 


198  Tin:  law  of  interest. 

est,  -^vcro  alike  haniifiil,  the  lirst  leading  to  the  stagnation 
of  l)iisiness,  and  the  other  to  merciless  extortion.  Usury 
laws  have  also  been  passed  in  China  and  other  heathen 
countries.^ 

In  early  times  it  was  generally  a  criminal  oflence  to 
take  usurious  interest;  but  now  it  is  only  a  civil  offence, 
except   in  a  few  of  the  states  where  it  is  a  misdemeanor. 

If  a  contract  is  made  for  the  payment  of  a  larger  rate 
per  cent  than  the  law  allows  (not  a  smaller  rate"-)  or  for 
a  certain  sum  of  money  which  amounts  to  more  than  the 
legal  maximum  rate,*^  it  is  termed  an  usurious  contract,* 
and  the  amount  above  the  legal  maxiuuun  limit  is  usury. 
It  is  clear  then  that  unless  there  is  a  fixed  maximum  rate, 
there  can  be  no  usury.^  The  usury  law  applies  to  the  loan 
or  use  of  property  as  well  as  money,  if  the  statute  so  de- 
clares.*^ 

The  usury  laws  in  the  various  states  that  have  them  are 
very  unlike.  In  some  states  the  statute, — for  the  usury 
law  is  always  a  creature  of  legislation," — 4ias  made  the 
entire  contract  void,  in  others  voidable;  in  some  states 
the  creditor  forfeits  all  the  interest,  in  ethers  the  interest 
above  the  legal  maximum  rate  ;  or,  if  the  usurious  inter- 
est has  been  paid  the  creditor  can  be  compelled  to  pay 
])ack,  in  some  states  twice,  and  in  others  three  times  the 
amount  that  he  has  received  in  excess  of  the  maximum 
legal  rate.^ 

'  3  Johns.  Ch.   (N.  Y.)  395  (1818)  ;  IG  Johns.  (N.  Y.)  3G7  (1S19)  ;  5 
Hill  (X.  Y.)  523  (1843)  ;  U  Barb.  (N.  Y.)  131  (1852). 
"•  10  Pa.  St.  2G9  (1851)  ;   10  Pa.  St.  117  (1852). 
3  9  Wis.  3G1  (1859). 

*  7  B.  Mon.  (Ky.)  542  (1847)  ;  4  Md.  455  (1877). 

*  25  Ark.  G25  (18G9)  ;  31  Ark.  484  (1S7G). 
«  1  Bibb  (Ky.)  333  (1809). 

777  Cal.  548  (1888). 

8  See  the  statutes  of  the  various  jurisdictions  in  chapter  thirteen 


USURY.  199 

Of  course,  a  special  rate  of  interest  ordered  by  the  leg- 
islature at  any  time  cannot  be  usurious.^ 

Usury  is  not  necessarily  fraudulent,  and  must  be  gov- 
erned by  other  rules. - 

If  the  statute  declares  that  usurious  contracts  are  void 
(and  they  cannot  be  void  in  any  other  Avay^),  they  cannot 
be  ratified  or  confirmed  by  the  parties,*  nor  be  set  up 
anywhere  or  at  any  time,  whether  usury  laws  prevail  in 
the  place  where  the  suit  is  brought  or  not ;  being  sim- 
ply null,^  even  in  the  hands  of  an  innocent  purchaser.*^ 
To  have  this  result  they  must  be  void  in  themselves.^ 
But  if  the  statute  merely  says  that  "it  shall  not  be  lawful" 
to  contract  for  more  than  the  authorized  rate,  the  contract 
is  void  for  the  entire  interest,  and  recovery  could  be  had 
only  of  the  principal.^  The  courts  say  continually  that 
an  usurious  contract  is  void,  when  they  mean  that  it  is 
voidable. 

Even  if  the  statute  says  that  no  interest  shall  be  col- 
lected the  court  may  allow  interest  as  damages  from  the 
time  the  debt  should  have  been  paid  at  the  legal  rate." 
"What  is  called  interest  may  not  always  be  interest,  tech- 
nically.^'' 

Usury  avoids  a  contract  in   equity  as  well  as  at  law." 

'  69  Ala.  413,  456  (1881). 

^  98  Ala.  59  (1890)  ;  76  Pa.  St.  52  (1874)  ;  81  Pa.  St.  309  (1876). 

3  11  South.  Rep.  (Miss.)  531  (1892). 

*  4  Bibb  (Ky.)  319  (1816)  ;  3  Brev.  (S.  C.)  54  (1812). 

"l   Port.    (Ala.)  57    (1834);  5   Day   (Conn.)  128  (1811);  2  Shepl. 
(Me.)  240  (1837)  ;  2  N.  H.  42  (1819). 

«  1  Port.  (Ala.)  57  (1834);  5  Tex.  171  (1849)  ;  79  Tex.  120  (1890). 

^  2  Puis.  (Me.)  212  (1876). 

873  Ala.  Ill  (1882). 

9  27  Conn.  363  (1858)  ;  33  Conn.  81  (1865). 
">  10  Allen  (Mass.)  82  (1865). 
"  5  Vt.  279  (1833). 


200  THE    LAW    OF   INTEREST. 

Merchants  or  other  customs  will  not  be  permitted  to  mod- 
ify or  aftect  usury  laws.^ 

United  States  banks,^  and  other  banking  companies,'^ 
and  corporations  are  within  the  provisions  of  usury  laws, 
and  are  atFected  by  them  the  same  as  individuals,^  na- 
tional banks  being  under  the  exclusive  control  of  the 
United  States  laws.^  The  taking  of  usurious  interest  is 
lial)lo  to  cause  the  loss  of  their  charter.*' 

Tlierc  must  be  an  agreement  to  pay  usury  at  least. ^  A 
stipulation  in  arbitration  articles  that  illegal  interest  shall 
be  allowed,  is  valid,  as  it  is  not  a  contract.^ 

It  is  not  necessary  to  constitute  it  usury  that  the  con- 
tract be  payal)le  in  money  alone  ;  it  may  1)e  payable  in 
chattels." 

More  than  legal  interest  contracted  for  or  received 
through  a  mistake  in  calculation,  or  otherwise,  either  by 
the  parties  themselves,  orl)y  one  of  their  clerks,^*'  is  not 
usury ,^^  and  no  penalty  attaches.'-  But  it  must  be  a  mis- 
take of  fact  and  not  of  law.'-^     So  if  an  executor   igno- 

'  109  N.  C.  539  (1891)  ;  39  Pa.  St.  3G1  (1861). 

2  5  Heath  (Me.)  109  (1855). 

3  24  Comi.  147  (1855) ;  9  Mass.  49  (1812). 

*  7  How.  (Miss.)  508  (1843)  ;  33  Vt.  34G  (1860),  621  (1861). 

5  44  Ind.  298  (1873) ;  115  Mass.  539,  547  (1874). 

«  4  Geo.  (Miss.)  474  (1857). 

7  3  Gr.  Ch.  (N.  J.)  128  (1837)  ;  1  Gr.  Ch.  (N.  J.)  44  (1838)  ;  29  N.  Y. 
,337  (1864)  ;  81  N.  Y.  293  (1881)  ;  85  N.  Y.  550  (1881). 

s  45  O.  St.  377  (1877). 

9  10  Ired.  L.  (N.  C.)  315  (1849). 

'MKand.  (Va.)  406  (1826). 

"  4  Pet.  (U.  S.)  205  (1830);  4  Hous.  (Del.)  315  (1872);  53  N.  W. 
Hep.  (Iowa)  410  (1892)  ;  7  La.  198  (1834)  ;  3  N.  H.  185  (1825)  ;  2  Cow. 
(N.  Y.)  678  (1824) ;  12  N.  Y.  (2  Kern.)  223  (1855)  ;  87  N.  Y.  50(1881)  ; 
101  N.  C.  99  (1888)  ;  1  O.  St.  409  (1853). 

'-4  Pet.  (U.  S.)  205  (1830);  9  Ark.  22  (1848);  25  Ark.  191,  258 
(1868). 

'•'2  Cow.  (N.  Y.)  678  (1824);  31  N.  Y.  472  (1865);  1  0.  St.  409 
ri853). 


USURY.  201 

rantly  receives  unlawful  interest  reserved  in  a  note  pay- 
able to  his  testator,  he  is  not  responsible,  cither  person- 
ally or  as  executor.^  Though  a  note  given  in  payment  of 
a  preexisting  debt  exceeds  the  amount  of  such  debt,  the 
payee  is  not  guilty  of  a  violation  of  the  usury  laws,  says 
the  Texas  court,  when  it  appears  that,  being  very  ill,  he 
intrusted  the  computation  of  the  interest  on  the  old  debt 
to  a  third  person,  who  drew  the  note,  and  that  he  pro- 
tested against  the  excessive  interest,  and  gave  positive  in- 
structions that  the  maker  should  not  be  held  lial)Ie  for  it, 
since  the  intent  to  take  usury  constitutes  the  oifence.^ 

TIic  offence  against  the  statute  of  usury  is  complete 
when  more  than  legal  interest  is  reserved  or  taken  when 
the  loan  is  made,  whether  the  principal  sum  is  ever  re- 
paid or  not.^     The  language  of  the  statute  governs. 

Most  of  the  decisions  of  the  highest  courts  of  the  country 
pertaining  to  usury  have  princi})ally  concerned  the  con- 
struction of  the  statutes  of  the  various  states.  The  prin- 
ciples here  given  are  not  local  in  their  application,  but 
have  a  general  bearing  upon  usury  in  all  states  whether 
usury  laws  prevail  there  or  not. 

I.       WHAT  CONTRACTS  ARE  USURIOUS. 

To  make  a  contract  usurious  it  must  be  for  a  loan,*  to 
be  returned  at  all  events,^  and  not  a  sale. 

Each  and  every  instance  of  the  receipt  of  usury  is  an 
offence.^ 

The  contract  must  be  usurious  in  itself,^  andatthe  time 

'  7  Allen  (Mass.)  59  (18C3). 

2  21  S.  W.  Kep.  (Tex.)  G9  (1893). 

3  5  Mass.  53  (1809). 

<  1  Black  (U.  S.)  115  (1861)  ;  4  Ind.  283  (1853)  ;  11  La.  491  (1838)  ; 
15  La.  Ann.  457  (18G0)  ;  14  Ore.  47  (188G)  ;  85  Va.  621  (1889). 

5  10  Md.  57  (185G). 

M  W.  &  S.  (Pa.)  449  (1842). 

^  1  Root  (Conn.)  110  (1789)  ;  5  Fla.  504  (1854)  ;  2  Shcpl.  (Me.)  240 
(1837)  ;  2  Puis.  (Me.)  212  (1876)  ;  23  Vt.  215  (1851)  ;  37  Vt.  G08  (18G5). 


202  THE    LAW    OF    INTEREST. 

when  it  is  niade,^  and  if  the  statute  requires  that  there  be 
a  corrupt  agreement,  then  the  minds  of  tlie  contracting; 
parties  must  meet  as  to  its  usurious  nature,  tliat  is,  both 
must  really  know  they  are  committing  usury.-  An  inad- 
vertent violation  of  the  usury  hiw  is  not  usurious.^  Where 
there  is  an  agreement  for  usury,  the  corrupt  nature  of  it 
is  presumed.*  In  New  Jersey,  if  notes  stipulate  for  in- 
terest at  a  hiwful  rate,  and  more  is  taken,  a  corrupt 
original  agreement  is  presumed,  unless  it  is  taken  by  an 
executor  of  the  creditor.^ 

In  construing  usury  statutes,  it  is  the  practice  both  in 
England  and  America  to  allow  no  contract  to  l)e  good  if 
usury  will  be  its  ultimate  effect.^  It  is  the  intention  of 
the  parties  in  making  a  contract,  and  not  the  form  or 
laniruaire  used  that  determines  whether  it  is  usurious  or 
not,^  all  devices,  shifts  and  subterfuges    to  cover  usury 

•  8  Mass.  101,  256  (1811) ;  9  Mass.  45  (1812) ;  2  N.  H.  42  (1S19)  ;  10 
R.  I.  503  (1873)  ;  17  Vt.  231  (1845)  ;  19  Vt.  540  (1847).  A  renewal  of 
a  note,  payable  in  Confederate  money,  for  the  same  amount  for  -which 
it  was  originally  drawn,  "without  scaling,  after  the  purchasing  power 
of  Confederate  money  had  greatly  depreciated,  is  not  usury.  9  W. 
Va.  333,  345  (1876). 

2  3  Day  (Conn.)  268  (1808) ;  4  Day  (Conn.)  9G  (1809)  ;  32  Barb.  (N. 
Y.)  557  (1860)  ;  33  Barb.  (N.  Y.)  229  (1860)  ;  44  Barb.  (N.  Y.)  521 
(1865). 

3  67  Miss.  146  (1889). 

*  2  Harr.  (N.  J.)  487  (1840)  ;  2  Beas.  (N.  J.)  351,  357  (1861). 
*3Gr.  Ch.  (N.J.)  128  (1837). 

6  5  B.  Mon.  (Ky.)  150  (1844)  ;  6  B.  Mon.  (Ky.)  530  (1846)  ;  44  Ta. 
St.  32  (1862). 

7  4  Port.  (Ala.)  128  (1836);  11  Ala.  236  (1847);  46  Ga.  166  (1872); 
49  Ga.  133,  514  (1873)  ;  78  Ga.  635  (1887)  ;  3  Gilm.  (111.)  547  (1846); 

19  111.  623  (1858);  27  111.  301  (1862);  35  111.  186  (1864)  ;  67  111.  500 
(1870);  62  111.  461  (1872);  89  111.  123  (1878);  106  111.  99  (1883);  108 
111.  633  (1884)  ;  7  Ind.  680  (1856)  ;  9  Ind.  140  (1857)  ;  7  G.  &  J.  (Md.) 

20  (1835)  ;  2  Md.  Ch.  201  (1850)  ;  0  Neb.  151  (1877)  ;  8  Neb.  423  (1879)  ; 
3  Gr.  (N.  J.)  255,  258  (1836)  ;  2  Ilalst.  Ch.  (N.  J.)  253  (1847)  ;  1  C.  E. 
Gr.  (N.  J.)  537  (1863)  ;  10  C.  E.  Gr.  (N.  J.)  491  (1875)  ;  9Cow.  (N.  Y.) 
65  (1828J;  1  Dtmio  (N.  Y.)  133  (1845)  j  62  jlJT.  Y.  344  (1875)  ;  0  0.  St. 


USURY.  203 

being  ineffectual/  no  matter  how  complicated  a  contract 
may  be  ;-  and  oral  evidence  is  admissible  to  show  iisur}' 
in  a  written  contract,^  A  note  cannot  be  made  larger 
than  the  amount  really  loaned,  and  then  a  legal  rate  of 
interest  be  written  in  ;*  and  although  a  partial  payment  is 
made  on  such  a  note  and  a  new  one  given  for  the  balance 
it  is  still  usurious.^  So  notes  cannot  be  antedated  for  the 
purpose  of  getting  more  than  legal  interest.^  So,  if  at  the 
making  of  a  note,  bearing  the  full  amount  of  legal  interest 
from  its  date,  an  extra  premium  or  bonus, ^  either  in  chat- 
tels or  money ,^  is  paid  by  the  borrower  to  the  lender,^  it 
is  usurious  ;   but  it  is  legal  if  it  is  paid  by  or  to  a  third 

19  (1856);  44  Pa.  St.  32(1862);  1  E.  1.151  (1840)  ;  24  Tenn.  406  (1844)  ; 
26  Tenn.  35  (1846)  ;  41  Tcnn.  180  (1860)  :  2  Call  (Va.)  421  (1800)  ;  4 
Eand.  (Va.)  406  (1826)  ;  58  Wis.  56  (1883). 

'  79  Ala.  76  (1885)  ;  4  Hous.  (Del.)  289  (1871)  ;  78  Ga.  251  (1886)  ;  9 
Rob.  (La.)  125  (1844) ;  12  Rob.  (La.)  273  (1845) ;  11  La.  Ann.  638  (1856)  ; 
16  Md.  11  (1859)  ;  67  Md.  18  (1887);  68  Miss.  310  (1890);  1  McCart.  (N. 
J.)  229  (1862)  ;  2  McCart.  (N.  J.)  476  (1863)  ;  1  C  E.  Gr.  (N.  J.)  537 
(1863);  78  N.  Y.  137  (1879);  1  Hayw.  (N.  C.)  336  (1796);  12  O.  544 
(1841)  ;  25  O.  St.  420  (1874)  ;  24  Tenn.  373  (1844)  ;  43  Tenn.  31  (1846)  ; 
2  Call  (Va.)  421  (1800)  ;  17  Wis.  383  (1863). 

2  Hill  &  D.  Siipp.  (N.  Y.)  65  (1843). 

^  5  Lit.  (Ky.)  84  (1824)  ;  7  Mon.  (Ky.)  252  (1828)  ;  7  Dana  (Ivy.)  300 
(1838)  ;  7  Bush  (Ky.)  79  (1869)  ;  43  Minn.  307  (1890). 

4  65  Iowa  403  (1884)  ;  12  Kas.  500  (1874) ;  3  Mart.  N.  S.  (La.)  622 
(1825)  ;  19  La.  185  (1841)  ;  46  Minn.  400  (1891)  ;  4  Cush.  (Miss.)  468 
(1853);  1  C.  E.  Gr.  (N.  J.)  445  (1863);  Harp.  (S.  C.)  81  (1823),  372 
(1824)  ;  2  Rich.  (S.  C.)  73  (1845)  ;  21  S.  W.  Rep.  (Tex.)  930  (1893)  ; 
2  Wms.  (Vt.)  130  (1855)  ;  30  Vt.  628  (1858). 

=  1  Dall.  (U.  S.)  216  (1787). 

6  68  Iowa  255  (1885). 

'  50  Iowa  596  (1879)  ;  12  W.  P.  D.  Bush  (Ky.)  110  (1876)  ;  3  La.  387 
(1832);  19  La.  185  (1841);  11  La.  Ann.  511  (1856);  12  La.  Ann.  660 
(1857)  ;  16  La.  Ann.  239  (1861)  ;  34  La.  Ann.  893  (1882)  ;  52  Md.  148 
(1879)  ;  8  Mass.  135  (1811)  ;  34  Barb.  (N.  Y.)  157  (1860)  ;  35  Barb. 
(N.  Y.)  44  (1860)  ;  10  O.  378  (1842).  See  3  Ch.  Sent.  (N.  Y.)  4  (1843)  ; 
1  HoAV.  Pr.  (N.  Y.)  44  (1844). 

8  2  Halst.  Ch.  (N.  J.)  73  (1846). 

9  21  S.  W.  Rep.  (Ark.)  432  (1893).  Sec  page  241. 


204  THE    LAW    OF    INTEREST. 

person.^  The  bonus  or  premium  received  must  ho  large 
enouizh  to  make  the  amount  of  interest  contracted  for  and 
the  bonus  together  amount  to  more  than  legal  interest  to 
make  it  usurious.'-  It  is  usurious  if  the  note  is  written  for 
the  full  amount  and  some  privilege  is  given  beside."^  The 
premium  or  bonus  must  be  certain.^  Where  an  insurance 
company  made  a  loan,  and  for  its  own  security  the  owner 
had  the  property  insured  in  that  company,  which  received 
the  i)remium,  it  was  not  usurious  ;M)nt  if  no  policy  had 
been  issued  it  would  have  l)een  held  otherwise.^  It  is  not 
usurious,  in  getting  a  loan,  for  the  borrower  to  do  what 
he  is  already  legally  bound  to  do  as  a  condition  for  the 
loan.^  A  gift  from  the  borrower  to  the  lender,  made  im- 
mediately after  a  loan,  is  not  usurious  ;  ^  but  where  the 
borrower  receives  in  his  hand  the  full  amount  of  the  prin- 
cipal named  in  the  note,  and  then  passes  back  part  of  it, 
with  the  intention  of  making  the  amount  actually  loaned 
less  than  the  face  of  the  note,  it  is  usurious.® 

An  actual  loan  cannot  be  made  in  the  form  of  a  sale  ;^'' 

1  25  Ilun  (N.  Y.)  490  (1881).  A  maker  of  a  note  can  pay  an  accom- 
modation indorser  for  liis  indorsement  and  for  procuring;  its  discount 
at  a  bank,  and  it  -will  not  affect  the  bank  discounting  it  in  good  faith. 
37  N.  Y.  356  (18G7). 

«  1  Dong.  (Eng.)  235  (1779). 

3  5  C.  E.  Gr.  (N.  J.)  300  (I8G9)  ;  7  Paige  (N.  Y.)  557  (1839). 

*  Add.  (Pa.)  124  (1793). 

s  3  Wend.  (N.  Y.)  29G  (1829)  ;  3  Edw.  (N.  Y.)  199  (1838). 

«  1  Hall  (N.  Y.)  480  (1829). 

7  3G  Barb.  (N.  Y.)  649  (1862)  ;  69  N.  Y.  339  (1877). 

8  32  Barb.  (N.  Y.)  557  (1860).     See  56  N.  Y.  640  (1874). 

9  2  Ind.  546  (1851)  ;  81  Iowa  569  (1890)  ;  30  Md.  485  (1869) ;  60  Vt. 
209  (1887). 

•"S  Day  (Conn.)  100  (1811);  1  McArt.  (D.  C.)  144  (1873)  ;  49  Ga. 
133  (1873)  ;  81  Ga.  81  (1888)  ;  1  Gilni.  (111.)  690  (1844)  ;  3  Gilra.  (111.) 
547  (1846);  15  111.  519  (1854);  18  111.  101  (1856);  5  Mon.  (Ivy.)  469 
(1827)  ;  3  Dana  (Ky.)  367  (1835)  ;  1  Gr.  Ch.  (N.  J.)  453  (1841)  ;  1  C  E. 
Gr.  (N.  J.)  210  (1863)  ;  62  N.  Y.  344  (1875)  ;  30  Tex.  400  (1867)  ;  2  Call 
(Va.)  421  (1800)  ;  7  Leigh  (Va.)  26  (1836). 


USURY.  205 

and  the  value  of  the  property  can  be  shown  to  prove  it  a 
loan.^  So  if  the  price  of  goods  sold  is  agreed  to  be  much 
higher  than  the  real  value,  and  credit  is  given  with  inter- 
est on  the  sum  due  in  the  meantime.^  So  a  note  given 
for  goods  sold  on  credit  at  higher  price  stipulating  that  if 
not  paid  at  maturity  of  credit  it  is  to  bear  the  highest  con- 
ventional rate  from  the  date  of  sale  till  paid,  is  usurious.^ 
So  if  cash  price  is  fixed,  and  more  than  legal  interest  is 
charged  on  deferred  payments,*  it  is  usurious  though  not 
called  a  loan.^  So  if  a  mortgagee  buys  a  chattel  of  his 
mortgagor,  for  an  agreed  cash  price,  and  charges  its  value 
in  his  account  for  advances,  as  a  much  larger  sum  ;  that,  too, 
is  usurious.^  It  is  also  usurious  to  make  contracts  part  of 
the  consideration  of  another  contract^  at  their  ftice  value, 
when  they  arereally  worth  much^ less, ^unless  the  borrower 
claims  them  to  be  worth  as  much  to  him  ;^^  and,  also, 
making  a  note  payable  in  a  specific  commodity,  which  is 
agreed  to  be  at  a  lower  rate  than  its  current  value  ;  ^^  or, 
where  a  purchase  of  property  is  made  by  the  lender,  at  a 
high  price,  on  condition  of  a  loan  ;^'^  or  a  loan  of  depreci- 

'  78  Ga.  G35  (1887)  ;  1  C.  E.  Gr.  (N.  J.)  537  (18G3). 

2  36  Ark.  248  (1880)  ;  9  Rob.  (La.)  194  (1844)  ;  62  N.  Y.  344  (1875)  ; 
2  Spear  (S.  C.)  238  (1843). 

=^9  Rob.  (La.)  194  (1844). 

*  75  Ga.  739  (1885). 

^  1  Stew.  (Ala.)  391  (1828). 

«  85  Ala.  394,  417  (1888). 

^  2  Rand.  (Va.)  109  (1823). 

»  Must  be  Avortli  considerably  less.     1  Barb.  (X.  Y.)  432  (1847) ;  19 
N.  Y.  (5  Smith)  37  (1859). 

9  1  Johns.  Ch.  (N.  Y.)  536  (1815) ;  19  Johns.  (N.  Y.)  496  (1822) ;  7 
Paige  (N.  Y.)  557,  615  (1839)  ;  2  Hill  (N.  Y.)  499  (1842)  ;  5  Barb.  (N. 
Y.)  613  (1849)  ;  7  N.  Y.  (3  Seld.)  328  (1852)  ;  5  Ired.  L.  (N.  C.)  692 
(1845)  ;  11  Vt.  300  (1839)  ;  3  Grat.  (Va.)  148  (1846)  ;  contra,  in  New 
Yorli,  31  Vt.  653  (1859).  See  3  Conn.  266  (1820). 
'0  2  Hill  (N.  Y.)  499  (1842). 
"  8  Mass.  266  (1811). 

'2  7   Ind.   250  (1855)  ;    17  N.  H.  43  (1845)  ;  100  Pa.  St.  551  (1882)  ;  5 
Rand.  (Va.)  132  (1827). 


2(i(l  THE    LA-W    OF    INTEREST. 

nted  currency  or  notes,  to  be  repaid  in  bankable  bills,^  if 
usury  isintcntletl.  Each  of  these  cases  is  usurious.  Neither 
can  usury  be  covered  up  by  a  purchase  of  an  annuity .- 
But  it  is  not  usurious  where  the  property  is  agreed  to  be  at 
the  vahie  it  will  be  sold  for  six  months  hence. ^  Nor  is  a 
note  usurious  if  its  interest  is  to  be  paid  "in  gold  or  its 
equivalent."^ 

As  already  stated,  if  a  loan  of  property  is  estimated 
above  its  specific  value  at  the  time  the  contract  is  made 
it  is  usurious  ;'^  and  proof  that  the  property  subsequently 
sold  at  the  estimated  amount  in  payment  of  the  debt  does 
not  make  it  legal.*'  So,  reckoning  depreciated  bank  notes 
of  other  banks  at  par  is  usurious,  even  if  they  afterward 
reach  par."  Also,  if  bank  shares  are  given  by  the  lender  at 
a  higher  than  the  market  price. ^ 

An  actual  loan  cannot  be  made  in  the  form  of  rent  ;''* 
nor  for  the  use  of  a  chattel  if  the  use  is  worth  much  more 
than  the  legal  interest  on  the  loan  ;^'^  or,  for  an  article 
which  is  worth  more  than  the  legal  rate  ;^^  or,  as  damages 

'  9  Tenn.  2-t3  (1829),  44-t  (1830) ;  15  Tenn.  545  (1835)  ;  19  Tenn.  585 
(1838) ;  24  Tenn.  40G  (1844^. 
-  4  Pet.  (U.  S.)  205  (1830). 
3  7  N.  Y.  (3  Seld.)  328  (1852). 

*  101  Pa.  St.  32  (18&^2). 

'  12  Rob.  (La.)  273  (1845) ;  34  Barb.  (N.  Y.)  157  (ISGO). 
6  12  Rob.  (La.)  273  (1845). 

*  G  Mou.  (Ky.)  376  (1827)  ;  7  Mon.  (Ky.)  33G,  354  (1828)  ;  4  J.  J. 
Mar.  (Ky.)  48  (1830)  ;  2  Dana  (Ky.)  225  (1834)  ;  3  Dana  (Ky.)  309 
(1835);  8  S.  &  M.  (Miss.)  533,  543  (1847);  11  S.  &  M.  (Miss.)  140 
(1848)  ;  14  S.  &  M.  (Miss.)  18  (1850)  ;  5  Cusb.  (Mias.)  801  (1854). 

s  7  Mart.  N.  S.  (La.)  408  (1829). 

9  05  Ala.  382  (1880) ;  5  Day  (Conn.)  100  (1811)  ;  19  Ga.  551  (1850)  ; 
52  Ga.  G9  (1874);  59  Ga.  684  (1877);  77  Ga.  309  (1880);  7  Ind.  359 
(1855)  ;  G  Mon.  (Ky.)  IGO  (1827)  ;  IJ.  J.  Mar.  (Ky.)  557  (1829)  ;  13  S. 
&  R.  (Pa.)  218  (1825)  ;  53  Vt.  539  (1881). 

'"2  Stew.  &  Port.  (Ala.)  323  (1832);  3  Bibb  (Ky.)  207  (1813);  4 
Bibb  (Ky.)  328  (1810);  4  Mart.  N.  S.  (La.)  107  (1820);  13  La.  Ann. 
3C4  (1858). 

"  8  Leigh  (Va.)  330  (1837). 


USURY.  207 

to  hired  property.^  A  contract  for  purchasing  a  chattel  at 
half  price,  and  at  the  same  time  loaning  the  vendor  an- 
other sum  of  money,  on  the  condition  that  if  a  sum  larger 
than  the  pnrchase  price  and  the  loan  with  the  interest 
combined,  shall  be  secured,  that  the  chattel  shall  be  re- 
stored, and  the  money  lent  considered  as  paid,  is  usurious.^ 

A  mortgage  given  to  secure  a  part  of  the  purchase 
money,  thongh  not  a  technical  loan,  comes  under  the  usury 
law.^"^ 

A  loan  of  chattels  is  not  within  tlie  usury  law,  unless 
the  statute  expressly  says  so,  or  it  is  a  disgnise  for  an 
usurious  loan  of  money  ;  and,  therefore,  on  a  bona  fide 
loan  of  chattels  it  is  immaterial  what  compensation  is  re- 
ceived.* In  New  Yorlc,  it  is  held  to  apply  to  a  loan  of 
notes  f  and  in  Nortli  Carolina  the  acceptance  of  chattels 
as  well  as  money  brings  them  under  the  usnry  law.'' 

"Where,  in  lieu  of  policies  of  life  insurance  on  which 
notes  have  been  given,  paid  up  policies  are  issued,  con- 
taining a  provision  that  in  case  interest  on  the  notes  is 
not  paid  as  agreed,  the  policy  shall  become  void,  and  the 
provision  will  not  be  relieved  against  as  being  unconscion- 
able or  oppressive,  and  is  not  void  on  the  ground  of  usury 
as  it  is  not  a  contract  for  the  borrowing  or  loaning  of 
money. ^ 

Commissions  charged  on  an  exchange  of  notes,  arc 
usurious  if  more  than  legal  interest  is  thus  taken. ^ 

159  Vt.  75  (1886). 

2  1  Mar.  (Ky.)  65  (1817). 

MCE.  Gr.  (N.  J.)  210  (1863). 

"  5  Cow.  (N.  Y.)  144  (1825)  ;  4  Weud.  (N.  Y.)  679  (1830)  ;  17  Wend. 
(N.  Y.)  280  (1837)  ;  5  N.  Y.  (1  Seld.)  315  (1851). 

^  13  Johns.  (N.  Y.)  40  (1816)  ;  16  Johus.  (N.  Y.)  3G7  (1819)  ;  22  How. 
Pr.  (N.  Y.)  4  (1861). 

«98  N.  C.  244  (1887). 

'82N.  Y.  172  (1880). 

«  2  Johns.  Ch.  (N.  Y.)  182  (1816)  ;  5  Johns.  Ch.  (N.  Y.)  122  (1821). 


208  THE    LAW    OF    INTEREST. 

Kotes  exchanged  have  a  good  consideration  and  may 
be  enforced  against  each  otlier  ;^  bnt  an  exchange  to  carry 
an  usurious  contract  into  effect  will  be  usurious,-  in  spite 
of  their  sale  nature. 

An  advance,  by  an  auctioneer,  upon  goods  left  for  sale, 
for  five  per  cent  beyond  commission  is  usurious. ' 

It  is  also  usurious  to  give  in  exchange  for  a  security,  for 
the  payment  of  a  sum  with  interest,  a  check  for  the  same 
amount,  payable  at  a  future  day  without  interest.* 

An  agreement  to  pay  seven  per  cent  for  the  loan  of  a 
five  per  cent  security  is  usurious.^ 

A  mortgage  founded  on  an  usurious  consideration  can 
be  avoided  by  all  parties  having  liens  upon  the  property, 
says  the  New  York  court  of  appeals.*' 

One  who  takes  a  note  at  its  inception  at  a  greater  dis- 
count than  the  legal  rate  nuist  be  conclusively  presumed 
to  have  intended  to  loan,  as  the  transaction  can  have  no 
other  character.  His  want  of  knowledge  that  the  note 
takes  its  inception  in  bis  hands  makes  no  difference  in  the 

rule.^ 

It  is  immaterial  says  the  Tennessee  court  whether  usury 
is  agreed  to  be  paid  before  or  after  the  maturity  of  the 
principal.^ 

An  agreement,  whereby,  upon  the  non-happening  of  a 
certain  contingency,  a  lender  is  to  receive  usurious  inter- 

>  3  Wend.  (N.  Y.)  C2  (1829)  ;  2  Dcnio  (N.  Y.)  C21  (1846) ;  13  Barb. 
(N.  Y.)  45  (1852)  ;  10  N.  Y.  (G  Scld.)  198  ^1854). 

'  11  raige  (N.  Y.)  GGO  (1845). 

3  12  La.  Ann.  20,  723  (1857)  ;  IG  Wend.  (N.  Y.)  574  (1837). 

*  2  Barb.  (N.  Y.)  56  (1847). 

'  5  Barb.  (N.  Y.)  G13  (1849)  ;  14  N.  Y.  (4  Kern.)  93  (1856)  ;  conUui, 
4  N.  Y.  (4  Comst.)  463  (1851). 

«27N.  Y.  568  (1863). 

'65N.  Y.  522  (1875). 

"SCTcnn.  242  (1877). 


USURY.  209 

est,  but  upon  its  happening  he  may  collect  the  loan  with 
le^al  interest  only,  is  usurious  notwithstanding  the  con- 
tino-ency,  says  the  court  in  Wisconsin.  This  was  a  case 
where  interest  was  to  be  paid  from  the  profits  of  a  firm, 
but  not  under  a  certain  per  cent,^  no  matter  what  the 
profits  amounted  to.  If  a  lender  is  to  have  a  share  of  the 
profits  of  a  firm  for  the  interest  on  his  money  used  in  its 
business  it  is  not  usurious  f  but  if  he  is  to  receive  such 
share  beside  the  legal  interest  it  is.^ 

The  renewal  of  a  valid  note  by  one  of  a  larger  amount  is 
also  usurious.* 

Where  a  note  bears  a  legal  rate,  but  in  a  separate  writ- 
ing the  borrower  agrees  to  pay  five  per  cent  more  interest 
on  it,  it  is  usurious.^  The  two  contracts  must  be  con- 
strued together  as  forming  one  transaction.''  And  the  law 
is  the  same  if  the  contract  for  the  usurious  interest  is  oral.^ 
Tiiough  separate  notes  are  given  for  the  amount  of  the 
excess  of  the  legal  rate,  if  paid,  the  debtor  shall  have 
credit  on  the  principal  for  the  amount.^ 

A  loan  at  the  highest  rate  of  interest,  and  a  slave 
pledged,  with  an  agreement  not  to  account  for  the  hire  of 
the  slave,  is  an  usurious  contract.^ 

It  is  usurious  for  a  mortgagee  to  exact  as  part  consider- 
ation for  his  loan,  his  employment  at  an  exorbitant  price, 
when  his  services  are  not  needed. ^° 


'  9  Wis.  3G1(1859). 
2  108  N.  Y.  187  (1888). 
^  19  La.  185  (1841). 
^8  Tenn.  392  (1828). 
^2McC.  (S.  C.)  369(1823). 
6  15  0.  St.  218  (1864). 
'  18  Wis.  298  (1864). 
«  lllud.  258  (1858). 
"  3  J.  J.  Mar.  (Ky.)  108  (1829). 
'"3  Stock.  (N.J.)  49  (1855). 
14 


210  THE    LAW   OF   INTEREST. 

(a)  Usioy  in  original  contract.  To  avoid  :i  contract 
on  the  ixiound  of  usury,  the  usury  must  have  been  in  it 
from  the  beginning.^ 

A  deed  tainted  with  usury  is  void  for  title,'-  if  made  di- 
rectly from  debtor  to  creditor;  or,  if  the  dcl)tor,  holding 
the  equitable  title,  causes  the  third  party  holding  the  legal 
title  to  convey  it  to  the  creditor;^  but  it  is  good  as  an 
equitable  mortgage  to  secure  the  principal  only.^  If  the 
holder  of  such  a  deed,  by  notice  given  at  the  sale  of  the 
amount  of  the  debt  due  to  him,  including  the  usurious  in- 
terest, causes  property  to  bring  less  than  its  full  value,  he 
becoming  the  purchaser,  he  is  liable  to  the  grantor  for  the 
difierence.^ 

Usury  taints  the  whole  of  a  contract.^  If  two  notes  are 
a  part  of  one  transaction,  one  of  them  only  being  usurious, 
the  whole  transaction  is  usurious,  so  both  notes  l)ecome  so.^ 
Also,  if  the  contract  and  security  for  it  form  one  entire 
transaction,  and  the  security  is  usurious,  the  whole  trans- 
action is.^  If  the  entire  consideration  of  a  contract  is 
usury  it  is  invalid.^ 

"Where  an  usurious  chattel  mortgage  authorized  the 
mortgagee  to  take  possession  before  default,  a  taking  and 
sale  by  the  mortgagee  is  held  to  be  a  ^vrongful  conver- 
sion.^° 

Where,  in  the  obligation  for  the  mortgage  debt,  au}- 

'88N.  C.  344  (1883). 

2  54  Ga.  554  (1875)  ;  55  Ga.  412  (1875),  G91  (187C)  ;  5G  Ga.  33  (187C)  ; 
75  Ga.  159  (1885)  ;  78  Ga.  220  (1886). 
^66  Ga.  398  (1881). 

"64  Ga.  71  (1879)  ;  G8  Ga.  821  (1882)  ;  contra,  80  Ga.  423  (1888). 
*G4  Ga.  71  (1879). 

«3  Dak.  328  (1884)  ;  40  Tenn.  723  (1859). 
^Cro.  Jac.  (Eng.)  508  (1641);  11  Mass.  74  (1814). 
»13  Conn.  249  (1839). 
871  Ga.  549  (1883). 
'"35  Miuu.  49C  (188G). 


USURY.  211 

illegal  interest  has  been  incorporated,  it  will  be  deducted 
from  the  amount.^ 

A  note  has  no  legal  inception  until  it  is  delivered  to 
some  person  as  evidence  of  an  existing  contract.  There- 
fore a  note  payable  to  A,  or  bearer,  which  is  never  deliv- 
ered to  A,  but  which  is  first  delivered  to  one  who  lends 
money  on  it  on  usurious  terms,  is  usurious  in  its  incep- 
tion.^    So  with  a  stolen  note.^ 

The  Georgia  court  says  that  the  taint  of  usury  results 
not  from  payment,  l)ut  from  agreement  whether  it  is  per- 
formed or  not ;  *  so  a  breach  of  an  usurious  contract  to  lend 
money  is  not  actionable.* 

{h)  Discounting.  Discounting  a  note  at  an  illegal  rate 
is  usury .^  Discounting  a  note  is  diiferent  from  a  pur- 
chase of  it;  it  is  a  loan,^  and  therefore  comes  under  the 
usury  law,  whereas  a  sale  of  it  would  not.^ 

What  constitutes  a  discount  and  what  a  sale  is  a  nice 
question.  It  seems  to  the  w^riter  that  discounts  of  busi- 
ness paper  should  be  prima  facie  deemed  sales,^  wdiile 
those  of  accommodation  paper  should  be  held  to  be  loans. ^"^ 
Generally,  it  depends  upon  the  terms  of  the  agreement, 
as  to  whether  or  not  it  is  to  be  repaid. ^^ 

If  a  bank  discounts  a  note  for  the  legal  rate,  and  in 
addition  makes  a  charge  for  collecting  in  the  place  where 

'17  O.  33G  (1848). 

2  20  Johns.  (N.  Y.)  288  (1822). 

3  IG   Wend.   (N.   Y.)  574  (1837);    2  Sandf.  (N.  Y.)  CO  (1848);    IG 
Barb.  (N.Y.)  548  (1853). 

"84  Ga.  481  (1889). 

*79  Ga.  347  (1887). 

6  28  Ala.  580  (1856). 

ns  O.  St.  G8  (1864). 

*2Harr.  (N.  J.)  191  (1839). 

9  2  Conn.  175  (1817). 
'0  15  0.  St.  68  (1864). 
"  See  2  Harr.  (N.  J.)  191  (1839). 


212  THE    LAW    OF    IXTEREST. 

the  paper  is  payable,  when  the  bank  is,  at  the  very  time, 
selling  drafts  upon  that  place  at  a  premium,  it  is  usury.' 
So,  where  a  bank  as  a  condition  of  the  discount  of  a  note, 
requires  the  applicant  to  have  another  note  discounted, 
and  to  leave  the  proceeds  with  it,  with  a  check  drawn 
auainst  the  deposit,  bearing  date  the  day  the  note  is  pay- 
able, it  is  usurious.-  So,  if  a  bank  requires  one  applying 
for  discount  to  keep  a  deposit  with  it,  it  makes  the 
discount  usurious.^  So,  if  a  bank  discounts  a  note  for 
legal  interest  but  gives  therefor  its  own  paper  for  its  face 
value,  which  is  worth  only  about  one-half  of  its  face,  it  is 
usury  :  *  or,  if  the  l)ank  notes  are  at  a  discount  and  paya- 
ble at  a  future  day  without  interest.^  Where  a  bank  dis- 
counts a  note  at  the  highest  rate  of  interest,  and  gives  the 
holder  as  cash  notes  due  two  or  three  months  later,  it  is 
also  usurious.^ 

If  a  bank  is  chartered  to  make  loans  and  not  to  Iniy 
paper,  all  discounts  must  be  deemed  to  be  loans.' 

(c)  Forbearance  to  sue.  A  promise  to  pay  usurious 
interest  for  forbearance  is  usurious,  as  it  is  essentiall}^  for 
a  loan.''  It  is  no  l)ar  to  the  foreclosure  of  a  mortgage 
security.^     A  simple  sum  of  money  given  for  forbearance 

'  2  Hill  (N.Y.)  451  (1842). 

2  22  IIoAV.  Pr.  (N.  Y.)  478  (1862). 

3  32N.  Y.  119  (1865). 

"2  Pet.  (U.  S.)  527  (1829). 

M  Pet.  (U.S.)  37  (1828). 

6  3Halst.  (N.  J.)  125  (1825). 

U5  O.  St.  G8  (1864). 

83  Fla.  110  (1850);  19  111.  623  (1858);  66  111.  532  (1873);  11  Ind. 
258  (1858)  ;  14  Ind.  401  (1860)  ;  15  Ind.  50  (1860)  ;  21  Ind.  129  (18G3)  ; 
17  Iowa  578  (1864)  ;  47  loAva  62  (1877)  ;  7  B.  Mou.  (Ky.)  476  (1847)  ; 
3  Geo.  (Miss.)  142  (1856)  ;  1  C  E.  Gr.  (N.  J.)  210  (1863)  ;  70  N.  Y.  63 
(1877)  ;  Tay.  &Conf.  (N.  C.)  167  (1800)  ;  1  Strob.  (S.  C.)  461  (1847)  ; 
-5  Strob.  (S.  C.)  151  (1850)  ;  28  S.  C  504  (1887)  ;  76  Va.  419  (1882)  ; 
85  Va.  621  (1889). 

9  14  Ind.  401  (1860). 


USURY.  213 

may  be  regarded  as  interest,  and  be  usurious.^  The  note 
itself  is  not  tainted,  but  the  excess  can  be  offset.^  A  note 
given  for  past  forbearance  is  without  consideration  ;  ^  and 
the  same  is  true  in  regard  to  indulgence  on  an  execution.* 
Such  interest  is  not  a  penalty.^  A  contract  to  grant  in- 
dulgence on  ail.  execution  on  payment  of  costs,  attorney's 
fees  and  commission  for  collecting  the  claim,  amounting 
to  more  than  the  legal  rate  is  usurious.^ 

(d)  Lender  must  receive  the  usury.  The  illegal  in- 
terest must  be  paid  to  the  lender,^  or  to  his  agent, ^  and 
not  to  any  one  else,  unless  it  is  so  agreed,  and  so  paid  to  the 
lender's  knowledge,''  to  make  it  usury.  So,  if  commis- 
sions are  paid  to  a  stranger,  it  is  not  usury  ;  ^^  but  if  paid 
to  the  lender  it  is.^^ 

(e)  Receipt  q/  usurious  interest.  Neither  a  legal  con- 
tract nor  its  security  is  affected  by  the  subsequent  receipt 
of  usurious  interest ;  the  usury  must  be  in  the  contract 
originally  to  affect  it.^'^  An  executor  is  responsible  for 
usurious  interest  received  by  himself,  and  also  by  his  tes- 
tator.^3  An  administrator  is  also  accountable  to  the  bor- 
rower for  usury  he  has  received,  though  he  has  settled 
with  the  estate.^* 

»15  Ind.  428  (1860)  ;  32  0.  St.  107  (1878). 

2 17  Ind.  209  (18G1)  ;  17  Io^Ya  G-1  (18G4). 

3  39  111.539(1864). 

"1  Rich.  Eq.  (S.  C.)  414  (1845). 

^28  S.  C.  504  (1887). 

M  Leigh  (Va.)  581  (1833). 

^25  Amer.  Rep.  253;  66  Ga.  638  (1881)  ;  2  Mar.  (Ky.)  300  (1820)  ;  2 
Hill  (N.  Y.)  685  (1842)  ;  5  Denio  (N.  Y.)  85  (1847). 

8 1  Stew.  (N.  J.)  345  (1877).     See  page  239. 

913  SteAV.  (N.J.)  502  (1885). 

•°121  U.  S.  105  (1887). 

"10  O.  378  (1842). 

'2 1  Madd.  (Eug.)  331  (1816)  ;  1  Root  (Conn.)  70  (1789)  ;  8  Mass.  101, 
256  (1811)  ;  9  Mass.  45  (1812). 

'3  8  B.  Mon.  (Ky.)  452  (1848). 

'■•  5  B.  Mon.  (Ky.)  145  (1844). 


214  THE  LAW  OF  INTEREST. 

Tho  use  of  the  proceeds  of  collateral  security  paid  l)e- 
fore  the  debt  is  due  will  not  affect  the  original  contract, 
unless  it  was  stipulated  at  the  time  the  contract  was  made 
that  the  lender  was  to  have  such  use.^ 

AVhen  the  payee  of  an  usurious  note  sells  it  for  the 
amount  actually  loaned  thereon  with  le<ral  interest  only, 
he  is  not  regarded  as  a  recipient  of  illegal  interest,  al- 
though the  maker  afterward  paid  the  full  amount  includ- 
ing the  usurious  interest  to  the  indorsee.^ 

Neither  is  it  usurious  if  the  defendant  in  order  to  in- 
duce the  plaintiff  to  purchase  a  note  adds  upon  the  face  of 
it  his  own  name  as  security.^ 

Where  a  mortgage  is  executed  upon  a  sufficient  consid- 
eration, it  is  not  rendered  usurious  1)y  a  preyious  under- 
standing with  a  third  person  that  he  will  purchase  it  at  a 
sum  less  than  its  face.* 

Eeceiying  a  note  for  usurious  interest  is  payment  of  it 
(as  far  as  receipt  is  concerned).'^ 

Taking  a  partial  payment  on  an  usurious  note  is  also 
deemed  to  be  a  receipt  of  usury  .^ 

II.       WHAT    CONTRACTS    ARE  NOT  USURIOUS. 

There  can  be  no  usury  in  a  contract  which  expressly 
stipulates  that  the  borrower  shall  not  pay  more  than  the 
legal  rate  of  interest.^ 

It  is  legal  to  loan  coin  to  be  paid  in  kind.^ 
A  note  payable  on  time,  with  interest  from  its  date,  is 
not  usurious.^     Neither  is  a  bond  conditioned  to  pay  a 

>  19  Barb.  (N.  Y.)  584  (1855). 

23  Virg.  (Me.)  358  (1867). 

'13  Barb.  (N.  Y.)  45  (1852)  ;  10  N.  Y.  (G  Seld.)  198  (1854). 

*  94  N.  Y.  129  (1883). 

5  1  Dall.  (Pa.)21G  (1787). 

«  1  Dall.  (Pa.)  210  (1787)  ;  4  AV.  &  S.  (Pa.)  115  (1842). 

7  19  S.  W.  Rep.  (Ark.)  918  (1892)  ;  28  S.  C.  534  (1887). 

«G2Tenu.  392  (1871). 

9  9  Tl-uu.  502  (1831). 


USURY.  215 

thousand  pounds  or  such  further  sum  as  shall  be  equal  to 
it  at  a  certaui  date.^ 

It  is  proper  to  indnde  days  of  grace  j^  and,  says  the 
North  Carolina  court,  it  is  not  usurious  if  one  is  not  entitled 
to  them,  even.^  It  seems  to  the  writer  very  doubtful  if 
other  courts  follow  this  latter  decision,  as  the  mistake  ap- 
pears to  have  been  one  of  law  rather  than  of  fact,  and  upon 
that  ground  there  can  be  no  excuse  for  it. 

(a)  Usury  must  be  paid  for  the  use  of  raoney,  etc. 
The  contract  must  be  for  a  loan,  and  not  a  sale, — usury 
not  existing  in  a  sale,*  no  matter  what  the  price,  or  other 
inducement,  unless  it  is  a  cover  for  usury. ^  So  a  man 
may  sell  his  credit  f  and  it  will  not  be  usurious  unless  it 

'2  II.  &M.  (Va.)  550  (1808). 

2  2  Conn.  (N.  Y.)  712  (1824). 

3  1  Dev.  L.  (N.  C.)  100  (1826). 

^9  ret.  (U.  S.)  418  (1835) ;  12  Wall.  (U.  S.)  22G  (1870)  ;  54  Ala.  39 
(1875);  55  Ark.  2G5  (1891);  1  Root  (Conn.)  393  (1792);  24  111.345 
(I860);  68  111.530  (1873);  83  111.  519  (1876);  90  III.  152  (1878);  11 
Ind.  117  (1858) ;  14  Ind.  607  (1860)  ;  15  Iowa  93,  362  (1863)  ;  31  Iowa 
444  (1871) ;  Hardin  (Ky.)  186  (1807)  ;  3  Mar.  (Ky.)  390  (1821)  ;  4  Lit. 
(Ky.)  125  (1823)  ;  5  Mon.  (Ky.)  69  (1827)  :  IJ.  J.  Mar.  (Ky.)  497  (1829)  ; 

3  B.  Mon.  (Ky.)  68  (1842)  ;  6  B.  Mon.  (Ky.)  530  (1846)  ;  7  B.  Mon. 
(Ky.)  541,  549  (1847)  ;  11  La.  491  (1838)  ;  15  La.  306  (1840)  ;  9  Neb. 
11  (1879) ;  14  Neb.  378  (1883)  ;  3  Stock.  (N.  J.)  362  (1857)  ;  9  C.  E.  Gr. 
(N.  J.)  120  (1873),  358  (1874);  15  Johns.  (N.  Y.)  44  (1818)  ;  8  Cow. 
(N.  Y.)  669  (1826)  ;  2  Wend.  (N.  Y.)  256,  5G9  (1831)  ;  9  Paige  (X.  Y.) 
478  (1842)  ;  4  Hill  (N.  Y.)  472  (1842)  ;  4  N.  Y.  (4  Comst.)  225  (1850)  ; 
13  Barb.  (N.  Y.)  45  (1852)  ;  10  N.  Y.  (6  Seld.)  198  (1854)  ;  33  N.  Y. 
53  (1865)  ;  35  N.  Y.  494  (1866)  ;  6  O.  St.  256  (1856)  ;  14  0.  St.  396 
(1863)  ;1  Dall.  (Pa.)  216  (1787);  2  Dall.  (Pa.)  92  (1785) ;  3  McC. 
(S.  C.)  365   (1827)  ;  4  McC    (S.  C)  402  (1827)  ;  40  Tenn.  723  (1859)  ; 

4  H.  &  M.  (Va.)  490  (1810)  ;  2  Munf.  (Va.)  36  (1811)  ;  4  Munf.  (Va.) 
303  (1814)  ;  6  Munf.  (Va.)  472  (1820)  ;  9  Leigh  (Va.)  556  (1838)  ;  16 
S.  E.  Rep.  (W.  Va.)  512  (1892)  ;  3  Wis.  725  (1854)  ;  16  Wis.  22  (1862). 
See  21  Wend.  (N.  Y.)  285  (1839)  ;  Hill  &  D.  Supp.  (N.  Y.)  252  (1843). 

»  10  S.  &  M.  (Miss.)  89  (1848)  ;  12  S.  &  M.  (Miss.)  286  (1849)  ;  3 
Stock.  (N.  J.)  362  (1857)  ;  9  C  E.  Gr.  (N.  J.)  120  (1873)  ;  40  Tenn. 
723  (1859). 

«4  Denio  (N.  Y.)  264  (1847);  3  N.  Y.  (3  Comst.)  344  (1850);  4 
N.  Y.  (4  Comst.)  363  (1850). 


216  THE    LAW    OF    INTEREST. 

is  in  fact  a  loan.^     An  exchange  of  credits,  securities,  or 
commodities,  which  the  parties  bona  fide  estimate  at  equiv- 
alent vahics,  is  not  illegal,  unless  it  is  a  mere  device  to 
cover  usury.-     A  sale  with  a  right  to  repurchase  may  he  a 
device  to  evade  the  usury  law,  if  the  property  is  of  greater 
value  f  but  is  not  on  its  face  usurious  although,  if  not  paid 
at  maturity  of  a  loan,  it  is  to  bear  a  large  rate  of  interest.* 
Nef'otiable  paper  and  securities   may  also  be  sold  for 
what  they  will  bring,  the  same  as  chattels.^     There  is  a 
distinction,  however,  between  business   and    accommoda- 
tion paper.     If  it  is  business  paper,  a  note  or  bill  may  be 
sold  at  an  usurious  discount,"  and   yet  not  be  illegal,  al- 
though it  is  indorsed  by  the  party  making  the  sale.^     But 
it  it  Is  acconnnodation  paper,  which  does  not  become  ef- 
fective until  negotiated,  and  is  made  simply  to  raise  money 
on,  it  is  treated  as  a  loan    by  the  indorsee,  and  is  prima 
facie  usurious. 8    The  drawer  of  a  ])ill  may  sell  it  after  ac- 
ceptance.^    The  test   is  whether   or  not   it  was  a  perfect 
and  available  instrument  in  the  hands  of  the  payee  at  the 
time  of  the  transfer,  upon  which,  Avhen  due,  he  could  have 

1  3  N.  Y.  (3  Comst.)  344  (1850). 

•  9  Pet.  (U.  S.)  378  (1835) ;  5  Mon.  (Ky.)  4G9  (1827)  ;  3  La.  Aun.  157 
(1848)  ;  14  N.  Y.  (4  Kern.)  93  (1S5G). 
3  3Daua  (Ky.)  173  (1835). 
''  54  Iowa  243  (1880)  ;  or,  interest  on  a  larger  time  price,  32  S.  C. 

594  (1890). 

s  3  Dutch.  (N.  J.)  624  (1858)  ;  79  N.  Y.  224  (1870)  ;  91  N.  Y.  199,  324 
(1883)  ;  29  Hun  (N.  Y.)  129  (18S3). 

« 2  Scam.  (111.)  5G1  (1840)  ;  11  Ind.  117  (1858)  ;  31  Iowa  444  (1871) ; 
2CTenn.451  (1846). 

-  17  Via  761  (1851)  ;  14  Ind.  007  (I8G0)  ;  3  Shepl.  (Me.)  103  (1838)  ; 
4  Shepl.  (Me.)  456  (1840);  20  Me.  (2  AppL,  7  Shepl.)  98  (1841). 
Tud-e  Parsons  held  such  a  note  usurious  in  4  Mass.  156,  but  Chief-jus- 
tice'weston,  of  the  Maine  court,  thought  that  the  Massachusetts  case 
tnriu'd  on  another  point. 

^"2  Wall.  (U.  S.)  220  (1870) ;  17  Conn.  441  (184G) ;  1  H.  &  G.  (Md-) 
477  (1827)  ;  44  Barb.  (N.  Y.)  87  (1865). 

9  24  Weud.  (N.  Y.)  94  (1840). 


USURY.  217 

maintained  an  action  against  the  maker. ^  It  is  a  question 
for  the  juvy.^ 

Interest  payable  on  a  debt  after  its  maturity  at  more  than 
the  legal  rate,  none  being  payable  before  maturity,  is  not 
usurious,  but  is  to  be  regarded  as  a  penalty  for  non-pay- 
ment according  to  contract.^ 

The  usury  must  ahvaj^s  be  paid  either  directly  or  indi- 
rectly, expressly  or  essentially,  for  the  use  of  money,  etc.,^ 
and  paid  to  the  lender,^  in  order  to  bring  it  under  the  usury 
statutes.  Therefore,  when  the  full  legal  amount  has 
already  been  agreed  to  be  paid  for  the  loan,  it  is  not 
usurious  to  make,  bonafide,'^  an  agreement  to  pay  in  ad- 
dition to  that,  the  attorney's  fee  and  costs, ^  in  case  it  is 
necessary  to  bring  suit  on  the  claim,  and  a  suit  should  be 
brought. 

Neither  is  it  usurious  to  pay  commission,  etc., ^  to  a 

'  G  Ind.  232  (1855)  ;  10  Md.  57  (185G). 
2  10  Md.  57(185G). 

332  N.  E.  Kep.  (1110  495(1892);  3  Pi  nil.  78  (3  Cliaiid.  83)  (Wis.) 
(1850). 

*  52  Fed.  Rep.  (Arlv.)  G18  (1892)  ;  1  Root  (Conn.)  393  (1792). 

*  120  111.  390  (1887)  ;  121  111.  119  (1887)  ;  132  111.  550  (1890)  ;  133111. 
199  (1890)  ;  2  Stew.  (N.  J.)  454  (1878). 

6  2  Paige  (N.  Y.)  267  (1830). 

7  11  South.  Rep.  (Ala.)  836  (1892)  ;  120  Til.  390  (1887)  ;  122  111.  352 
(1887);  53  Ind.  258  (187G)  ;  54  Ind.  380  (1876);  29  Iowa  184  (1887); 
30  Iowa  131  (1870);  11  La.  Ann.  34  (185G);  4  How.  (Miss.)  573 
(1840) ;  3  S.  &  M.  (Miss.)  781  (1844)  ;  1  O.  St.  409  (1853)  ;  3  Ore.  389 
(1872)  ;  7  Watts  (Pa.)  126  (1838)  ;  12  Wis.  453  (1863)  ;  contra,  49  Iowa 
234  (1878)  ;  10  Bush  (Ky.)  115  (1873)  ;  G9  Miss.  770  (1892)  ;  IG  S.  E. 
Rep.  (N.  C.)  325  (1892). 

»  15  Ves.  (Eng.)  120  (1808)  ;  2  Dea.  &  Ch.  (Eug.)  12  (1832)  ;  1  L.  J., 
N.  S.,  Bky.  (Eng.)  73  (1832);  8  Moore  P.  C.  (Eng.)  227  (1853);  30 
L.  J.,  C.  P.  (Eng.)  193  (1861);  25  Amer.  Rep.  253;  26  Amer.  Rep. 
583  (1877) ;  61  Ala.  507  (1878) ;  18  Ark.  456  (1857) ;  47  Ga.  82  (1872) ; 
79  Ga.  356  (1887);  87  III.  513  (1877);  90  111.492  (1878);  100  111.611 
(1881);  110  111.  390(1884);  17  Bradw.  (III.)  539  (1885);  113  111.  382 
35);  120  111.   390  (1887);   121111.   119   (1887);  132  111.550(1890); 


218  THE    LAW   OF   INTEREST. 

broker  for  making  the  loan,  or  to  any  one  other  than 
the  lender.^  Commissions  may  be  a  cover  tor  usury.'-  In 
this  matter  of  conmiissions,  as  well  as  in  similar  circum- 
stances, the  intent  of  the  parties  must  govern,  and  that 
intent  is  a  matter  of  fact  to  be  found  ])y  a  jury,  as  to 
whether  it  is  an  adequate  compensation,  or  usurious  in- 
terest under  the  name  of  commission,  etc.^  Such  con- 
tracts are  viewed  with  great  jealousy,  as  they  are  liable 
to  be  perverted  to  usurious  purposes.  It  is  not  usurious 
for  the  agent  of  the  lender  to  divide  commissions  with  the 
agent  of  the  borrower.*  And  the  agent  of  the  lender,  even 
with  the  lender's  knowledge,  may  be  paid  a  proper  com- 
mission, and  it  Avill  not  be  usurious.^  But  if  the  lender 
negotiates  the  loan  himself,  and  retains  commission,  it  is 
usurious.*^ 

It  will  not  be  usurious,  however,  if  a  broker  gives  a 
portion  of  his  commission  to  the  lender.^ 

133  111.  109  (1890)  ;  4G  Iowa  32  (1870)  ;  4G  Iowa  319  (1877)  ;  51  Iowa 
297  (1879)  ;  7  Paige  (N.  Y.)  413  (1839)  ;  10  Paige  (N.  Y.)  94  (1843)  ; 
3  Sandf.  Ch.  (N.  Y.)  5G4  (184G) ;  11  Barb.  (N.  Y.)  80  (1851)  ;  20  How. 
Pr.  (N.  Y.)  519(1861);  21  IIow.  Pr.  (N.Y.)  404(1801);  G9  X.  Y.  597 
(1877);  70  N.Y.  239  (1877);  7  "Watts  (Pa.)  12G  (1838);  45  Tcnn.  497 
(18G8) ;  85  Va.  390  (1888).     See  92  N.  C.  450  (1885). 

'  21  IIow.  (U.  S.)  414  (1858)  ;  90  111.  492  (1878)  ;  6  Brachv.  (111.) 
523  (1880)  ;  GG  Miss.  365  (1889)  ;  4  Stew.  (N.  J.)  40  (1879)  ;  1  Johns. 
Ch.  (N.  Y.)  G  (1814);  7  Johns.  Ch.  (N.  Y.)  G9  (1823);  20  IIow.  Pr. 
(N.  Y.)  519  (18G1);  21  IIow.  Pr.  (N.  Y.)  404  (ISGI);  7G  X.  Y.  G14 
(1879). 

-  50  Iowa  59G  (1879)  ;  35  Minn.  513  (188G). 

M  M.  &  S.  (Eng.)  92  (1815)  ;  Holt  (Eng.)  25G  (181G)  ;  17  Ala.  774 
(1850);  18  Ala.  552  (1851);  2  Day  (Conn.)  483  (1807);  2  Conn.  341 
(1817) ;  8  Conn. 513  (1831) ;  14  Conn. 594  (1842) ;  30  Conn. 175  (18G1) ; 
40  Iowa  46  (1877);  1  Pick.  (Mass.)  288  (1823);  59  Vt.  569  (1887). 
See  4  Hill  (N.  Y.)  224  (1843). 

«5G  Iowa  426  (1881). 

6  89  Mo.  375  (1886). 
"50  Iowa  590  (1879). 

7  53  How.  Pr.  (X.  Y.)  319  (1877). 


USURY. 


219 


Neither  is  it  usurious  for  a  lender  to  retain  what  he  has 
been  obliged  to  pay  for  the  cost  of  exchange^  in  making 
the  loan.  It  is  usurious  if  the  taker  makes  a  profit  from 
it,2  or  it  is  done  to  evade  the  usury  law.^  But  a  loan  is 
not  rendered  usurious  by  the  general  advantage  obtained 
by  the  lender  by  means  of  the  difference  of  exchange  be- 
tween the  place  of  the  loan  and  the  place  of  payment,  both 
of  which  are  within  the  state  ;*  even  though  it  is  made  to 
be  discounted  in  the  particular  place  for  the  purpose  of 
enabling  the  person  discounting  it  to  make  a  profit  by  the 
rate  of  exchange.^ 

Neither  is  it  usurious  to  contract  for  premiums  ;^  nor  to 
retain  the  amount  paid,  or  to  be  paid,  for  taxes^  generally, 
state  tax  on  loan,^  travelling  expenses  to  see  security,^  at- 
torney's fee  f()rexaminingtitle,^^etc.,^^andotherexpenses  ;^'- 

1  48  Ga.  9  (1873)  ;  82  Ga.  312  (1889)  ;  52  111.  130  (1869)  ;  10  AVencl. 
N.  Y.)  lie  (1833)  -,  10  Pai-e  (N.  Y.)  109  (1843)  ;  12  N.  Y.  (2  Kern.)  223 
(1855)  ;  19  N.  Y.  (5  Smith)  245  (1859)  ;  34  Barb.  (N.  Y.)  33G  (1861)  ; 
46  Barb.  (N.  Y.)  98  (1806)  ;  52  N.  Y.  649  (1873)  ;  25  0.  St.  413  (1874)  ; 
17  Wis.  157  (1863);  26  Wis.  473  (1870);  contra,  7  Blf.  (lud.)  105 
(1844)  ;  17  Iowa  436  (1861). 

2  34  Barb.  (N.  Y.)  336  (1861). 

M3  O.  1  (1844)  ;  12  Wis.  480  (1860)  ;  13  Wis.  216  (1860)  ;  16  Wis. 
22  (18G2). 

''33N.  Y.  613  (1865). 

^  13  Barb.  (N.  Y.)  339  (1851)  ;  19  N.  Y.  (5  Sraitli)  134,  245  (1859). 

6  3  Mar.  (Ky.)  174  (1820) ;  7  Mass.  433  (1811). 

7  114  111.  133  (1885)  ;  24  Md.  62  (1865)  ;  33  Hun  (N.  Y.)  415  (1884). 
s  13  Ala.  779  (1848). 

955  Iowa  555  (1881). 

'0  431VIinn.  517  (1890);  3  Stew.  (N.  J.)  543  (1879);  4  Stew.  (N.  J.) 
40.  375  (1879)  ;  85  Va.  390  (1888). 

"  21  S.  W.  Rep.  (Tex.)  946  (1892). 

'2  21  S.  W.  Rep.  (Ark.)  478  (1893)  ;  103  111.  362  (1882)  ;  46  Iowa  46 
(1877);  21  Denio  (N.  Y.)  119  (1846);  2  Keyes  (N.  Y.)  41  (1865); 
.38  N.  Y.  281  (1868)  ;  76  N.  Y.  614  (1879)  ;  7  Watts  (Pa.)  126  (1838). 
Paying  another's  commission.    51  Ala.  336  (1874). 


220  TIIK    LAW    OF    INTEREST. 

and  the  anioiint  ofbrokcrage,  even  if  the  lendtT  is  a  stock- 
hokler  of  the  debtor  corporation.^ 

It  is  not  usurious  to  contract  for  a  hirgc  rate  of  interest 
where  the  lender  runs  an  extraordinary  rislc  ;-  as  it  is  then 
not  interest.^  The  risk  must  be  a  real  one,*  something 
irreater  tlian  the  common  risk  of  death  or  insolvency  of 
the  borrower  ;  and  in  determining  whether  or  not  it  is  such 
the  transaction  will  1)C  subjected  to  the  most  searching 
scrutiny,^  as  there  arc  circumstances  under  which  it  Avould 
be  usurious.^  In  consequence  of  this  exception  to  the  law 
of  usury,  bottomry  is  not  generally  affected  by  the  usury 
statute,^  ])ecause  there  is  a  real  risk  there. 

Upon  a  loan  of  money,  the  retaining  by  the  lender, 
with  the  assent  of  the  borrower,  of  a  sum  out  of  the 
amount  loaned  for  services  rendered  by  the  lender  to  the 
borrower,  and  not  for  the  use  of  the  money,  does  not  make 
the  transaction  usurious.^ 

To  pay  the  lender  the  discount  that  he  loses  in  selling  a 
former  note  to  raise  money  for  the  borrower  is  not  usury .^ 

In  rebuttal  of  the  defence  of  usury  the  fact  that  some  in- 
terest was  lost  on  the  money  loaned  by  withdrawing  it  from 
the  savings  bank,  however,  is  of  no  force  when  the  loan 
is  made  for  no  defined  term  of  credit,  but  is  payable  prcs- 

»  85  Va.  300  (1888). 

=  2  Jur.  (Eng.)  98  (1838);  51  Ala.  33G  (1874);  G-t  Ala.  527  (1879); 
05  Ala.  511  (1880)  ;  82  Ala.  315  (1880)  ;  85  Ala.  379  (1888)  ;  92  Ala.  135, 
104(1890);  4Del.Ch.  198(1871);  101111.523(1882);  1513ra(;lw.  (111.) 
309  (1884)  ;  9  Dana  (Ky.)  313  (1840)  ;  25  Huu  (N.  Y.)  124  (1881). 

'  8  Conn.  513  (1831)  ;  48  Ga.  9  (1873). 

*  7  IToAV.   (Miss.)  508  (1843)  ;  2  Paifie  (N.  Y.)  207   (1830). 

"  4  Del.  Ch.  198  (1871)  ;  14  111.  103  (1852)  ;  0  Mun.  (Ky.)  554  (1828). 

«85  Ala.  379,  394  (1888). 

•>  1  Atk.  (Eng.)  311  (1750)  ;  2  Ves.  sr.  (Eug.)  143  (1751)  ;  32  N.  Y. 
571  C1805). 

«  53  N.  W.  Rep.  (Minn.)  048  (1892). 

»  01  Iowa  274  (1883). 


USURY.  221 

ently,  and  might  be  demanded  at  once,  or  suffered  to  run 
for  years,  drawing  all  the  time  the  usurious  rate.^ 

Neither  is  it  usurious  to  agree  to  have  certain  profits  of 
the  business  in  which  the  loan  is  used  for  the  use  of  it  ;^ 
unless  the  agreement  is  to  receive  a  share  of  the  profits  be- 
side the  legal  interest  on  the  loan,  when  it  is  usurious.^ 

(b)  Frequent  payments  of  interest.  A  contract  is  not 
made  usurious  by  the  interest  on  it  being  payable  quarterly, 
semi-annually,  or  for  any  period  less  than  a  year.* 

(c)  Comjjound  interest.  An  agreement  to  make  inter- 
est principal  after  it  has  become  due,  either  expressly  or  im- 
pliedly, or  the  taking  of  compound  interest,  is  not  usury .^ 
If  the  interest  is  not  due  (where  a  contract  for  compound 
interest  is  allowed)  it  is  usurious,  whether  the  contract 
for  the   compound  interest  was  made  at  the  same  time  as 

'  32  N.  E.  Rep.  (N.  Y.)  035(1892). 

2  12  South.  Rep.  (Miss.)  145  (1892)  ;  9  Paige  (N.  Y.)  33-i  (1841)  ;  22 
Barb.  (N.  Y.)  118  (1856)  ;  108  N.  Y.  187  (1888). 

■^  19  La.  185  (1841)  ;  32  N.  E.  Rep.  (N.  Y.)  13  (1892). 

*  44  Conn.  493  (1877)  ;  31  111.  490  (1863)  ;  8  Blf.  (Intl.)  67  (1840)  ;  2 
Incl.  031  (1851)  ;  34  Ind.  115  (1870)  ;  1  Met.  (Ky.)  0G4  (1858)  ;  5  Paige 
(N.  Y.)  98  (1835)  ;  24  Weud.  (N.  Y.)  104  (1840)  ;  25  O.  St.  622  (1874)  ; 
3  Wis.  443  (1854). 

5  14  Amer.  Rep.  352  (1874)  ;  6  Ark.  463  (1846)  ;  18  Ark.  9  (1856)  ;  46 
Ark.  50  (1885);  11  Conn.  487  (1834);  48  Conn.  116  (1880);  13  Fla. 
451,  482   (1871);  37  Ga.  384   (1807);  79  Ga.  213  (1887);  109  111.  151 

(1883)  ;  124  111.  488  (1888)  ;  132  111.  550  (1890)  ;  92  Incl.  96  (1883)  ;  60 
Iowa  79  (1882)  ;  2  B.  Mon.  (Ky.)  336  (1842)  ;  5  La.  Ann.  615  (1850)  ; 
12  La.  Ann.  20,  723  (1857);  1  Fairf.  (Me.)  315  (1833);  16  Neb.    12 

(1884)  ;  54  N.  W.  Rep.  (Neb.)  129  (1893)  ;  3  N.  II.  40  (1824)  ;  I  Wend. 
(N.  Y.)  521  (1828)  ;  1  Barb.  (N.  Y.)  627  (1847)  ;  3  Barb.  (N.  Y.)  222 
(1848)  ;  55  N.  Y.  621  (1874)  ;  0  Jones  L.  (N.  C.)  582  (1859)  ;  3  O.  17 
(1827);  4  O.  303  (1831);  17  O.  330  (1848);  40  O.  St.  345  (1889);  4 
Yeates  (Pa.)  220  (1805)  ;  3  Brev.  (S.  C.)  417  (1814) ;  41  Tenn.  233 
(1800)  ;  45  Tenn.  497,  584  (1808)  ;  57  Tenn.  490  (1870)  ;  58  Tenn.  40 
(1870) ;  5  Tex. 171  (1849) ;  23  Tex.  308  (1859) ;  53  Tex.  559  (1880) ;  43 
Vt.  249  (1870)  ;  24  W.  Va.  634  (1884)  ;  31  W.  Va.  410  (1888)  ;  3  Wis. 
443  (1854);  12  Wis.  453  (1803);  28  Wis.  410  (1871);  contra,  08  Ind. 
181  (1879)  ;  70  Ind.  373  (1880)  ;  76  N.  C.  314  (1877). 


222  THE    LAW    OF    INTEREST. 

the  oriixinal  agreement  or  at  any  time  before  the  interest 
became  diie.^  In  such  cases,  to  determine  whether  or  not 
the  interest  exceeds  the  legal  rate  l)()tli  the  simple  and 
compound  interest  are  added  together.-  Neither  are 
quarterly  rests  usurious.^  Simple  interest  paid  for  the 
forbearance  of  usury  is  not  therefore  usury.*  The  court 
in  AVest  Virginia  holds  that  compound  interest  paid  for 
forbearance  is  usury .^ 

(d)  Interest  on  condition,  etc.  If  it  is  uncertain  at  the 
time  of  making  the  contract  what  the  interest  Avill  amount 
to,  whether  more  or  less  than  the  legal  rate,  it  is  not  usu- 
rious."^ Where  interest  is  payable  on  a  contingency,"  or, 
by  the  terms  of  the  contract,  payment  by  a  day  certain 
may  avoid  any  stipulated  usury,  the  contract  is  not  usu- 
rious,^ the  interest  in  the  latter  case  being  regarded  as  a 
penalty  for  the  default,  and  not  as  interest.^  But  when 
the  debt  cannot  be  discharged  by  payment  of  the  debt  and 
lawful  interest  thereon  it  is  usurious.^°  Upon  the  same 
principle  an  illegal  rate  of  interest  after  maturity  is  not 

1  35  Ark.  52  (1879)  :  85  111.  102  (1877)  ;  108  111.  033  (1884)  ;  134  111. 
294  (1890)  ;^  Neb.  358  (1889)  ;  51  N.  W.  Rep.  (Neb.)  753  (1892). 

2  51  N.  \\Wl\Qp.  (Neb.)  753  (1892). 

3  2  Halst.  Cli.  (N.  J.)  025  (1848)  ;  4  Ilalst.  Ch.  (N.  J.)  795  (1853). 
*  15  N.  11.52  (1844). 

s  24  W.  Va.  G34  (1884). 

6  G  Cow.  (N.  Y.)  G53  (1827). 

7  1  Wall.  (U.  S.)  G04  (1863)  ;  10  Mass.  284  (1813)  ;  3  Gray  (Mass.) 
225  (1855) ;  IOC  Mass.  413  (1871)  ;  118  Pa.  St.  89  (1888). 

8  4  Pet.  (U.  S.)  205  (1830);  2  Stew.  (Ala.)  42G  (1^30) ;  4  Ark.  44 
(1842) ;  1  Eoot  (Conn.)  393  (1792)  ;  13  111.  577  (1S52)  ;  2G  111.  54  (18G1)  ; 
35  111.  324  (1804);  39  111.  521  (18GG)  ;  53  111.  41G  (1870);  78  111.  53 
(1875);  91  111.  575  (1879);  4  Bradw.  (111.)  338  (1879);  108  111.  G33 
(1884)  ;  7  Ind.  41G  (185G) ;  11  Bush  (Ky.)  189  (1874)  ;  6  La.  Ann.  505 
(1850)  ;  8  Mass.  257  (1811)  ;  1  Dev.  Eq.  (N.  C.)  433  (1830). 

»  11  Bush  (Ky.)  189  (1874) ;  1  Dev.  Eq.  (N.  C)  433  (1830) ;  G  Miinf. 
(Va.)  433  (1819). 
>o  11  Bush  (Ky.)  189  (1874). 


USURY.  223 

iisiii-ioiis,^  even  if  the  conditional  interest  sbonlcl  then  run 
from  the  date  of  the  contract,-  but  the  Iowa  court  will  not 
allow  more  than  the  legal  rate.^  Parties  cannot  take  ad- 
vantage of  this  rule  and  make  their  notes  payable  only 
one  day  after  date,  and  stipulate  therein  that  if  they  are 
not  then  paid  they  shall  draw  interest  at  an  usurious  rate, 
it  being  so  plainly  the  intention  of  the  parties  that  such 
notes  are  not  to  be  paid  at  maturity,  and  that  it  is  a  cover 
for  usur}',  that  they  are  deemed  to  be  usurious.* 

(e)  Made  payable  in  another  stale.  Parties  can  agree 
to  make  a  contract  payable  in  another  state  from  that  in 
which  either  of  them  resides,  even  for  the  purpose  of  re- 
serving the  interest  of  that  state,  the  laws  of  which  allow 
a  laro-er  rate.^ 

{f)  Ante-date  interest.  A  note  bearing  interest  from  a 
time  prior  to  its  date  is  not  usurious  on  its  face  f  and  it 
is  not  usurious  if  the  borrower  is  responsible  for  interest 
on  the  loan  before  the  date  of  the  note." 

(g)  Ante-dated  notes.  Notes  dated,  to  evade  the  usury 
law,  before  the  loans  are  made  are  usurious.^  The  court 
in  Wisconsin  has  decided  that  it  is  not  usurious  to  give  in 
payment  for  several  claims  for  interest  which  fell  due  at 
various  times  a  single  note  bearing  interest  from  the  aver- 
a":e  of  those  times.^ 

'  Mor.  (Iowa)  425  (1844)  ;  1  G.  Gr.  (Iowa)  128  (1848)  ;  3  Iowa  244 
(185G) ;  10  Iowa  432  (1860)  ;  29  lowa  120  (1870)  ;  contra,  12  Rob.  (La.) 
178  (1845). 

=>  25  Iowa  28  (1868). 

=*  3  Iowa  244  (1856)  ;  21  Iowa  32G  (1866). 

*  25  111.  218  (1861)  ;  35  III.  324  (1864)  ;  53  III.  416  (1870). 

5  35  Ala.  580  (1860)  ;  29  Ind.  158  (1867). 

«7  Wall.  (U.  S.)  499  (1868);  4  Pick.  (Mass.)  173  (1826);  28  Tex. 
322  (1866)  ;  17  Wis.  297  (1863). 

7  87  N.  Y.  50  (1881)  ;  1  McC.  (S.  C)  145  (1821). 

8  68  Iowa  255  (1885)  ;  3  Gr.  (N.  J.)  255,  258  (1836)  ;  14  Wis.  648 
(1861). 

9  20  Wis.  275  (1866).. 


224  THE    LAW    OF    INTEREST. 

(//)  Reckoning  time.  Calling  thirty  clays  a  month  is 
not  usurious,  if  done  in  good  faith. ^ 

(i)  Trijling  amount  of  iisur>/.  Where  the  amount  of 
usury  received  is  insignificant,  as,  for  instance,  only  two 
cents  over  the  legal  amount,  the  court  should  not  let  the 
case  go  to  the  jury>  as  it  is  too  trilling,-'  hut  presume  it  to 
be  an  error  in  calculation.^ 

The  long-continued  practice  of  banks  taking  interest 
according  to  printed  tables  not  exactly  correct,  without 
objection,  may  be  conclusive  of  good  faith  in  taking  in- 
terest.* 

(j)  Interest  in  advance.  Taking  or  reserving  interest 
at  the  time  of  making  the  loan,  or  at  any  time  before  it 
becomes  due  is  not  usury. ^  This  rule  exists  rather  from 
necessity  than  principle.'^  Reserving  is  the  same  as  tak- 
ing, except  when  penalties  are  to  be  inflicted  upon  the 
lender  when  they  may  be  diflcrent,  as  where  the  statute 
applies  to  the  taking  and  not  to  the  reserving  of  interest.^ 

'  12  Pick.  (Mass.)  586  (1832)  ;  2  Ilarr.  (N.  J.)  487  (1840). 

''  10  G.  &  J.  (Md.)  299  (1838). 

3  2  Cow.  (N.  Y.)  CG4,  078  (1824). 

■•  1  Vt.  399,  42G,  430  (1829). 

*8  Wheat.  (U.  S.)  339  (1823);  3  Pet.  (U.  S.)  36  (1830);  3  How. 
(U.  S.)  62  (1845)  ;  141  U.  S.  384  (1891)  ;  1  Stew.  (Ala.)  442  (1828)  ;  51 
Ark.  548  (1889);  2  MacArt.  (D.  C.)  371  (1876);  16  S.  E.  Kep.  (Ga.) 
710  (1892)  ;  4  Scam.  (111.)  21  (1842)  ;  31  III.  490  (1863)  ;  77  111.  525 
(1875)  ;  110  111.  235,  390  (1884)  ;  132  111.  550  (1890)  ;  8  Blf.  (Incl.)  67 
(1846);  2  lucl.  631  (1851);  14  Incl.  401  (1860);  34  Ind.  115  (1870)  ;  53 
N.  W.  Rep.  (Iowa)  410  (1892)  ;  7  Kas.  405  (1871)  ;  12  W.  P.  D.  Bush 
(Ky.)  57  (1876)  ;  7  Rob.  (La.)  539  (1844)  ;  12  Pick.  (Mass.)  586  (1832) ; 
64  N.  W.  Rep.  (Neb.)  129  (1893);  15  Johns.  (N.  Y.)  162  (1818);  2 
Cow.  (N.  Y.)  664,  678,  712,  766  (1824)  ;  4  Wend.  (N.  Y.)  652  (1830)  ; 
12  N.  Y.  (2  Kern.)  223  (1855);  19  N.  Y.  (5  Smith)  245  (1859); 
30  Hun  (N.  Y.)  201  (1883);  1  Dev.  L.  (N.  C.)  100  (1826);  30  S.  C. 
01  (1888);  40  Tenn.  723  (1859);  2  Grat.  (Va.)  372  (1845);  contra,  8 
Allen  (Mass.)  78  (1864). 

8  40  Tenn.  723  (1859). 

^  9  Pet.  (U.  S.)  378  (1835),  overruling  2  Pet.  (U.  S.)  527  (1829). 


USURY.  225 

It  is,  however,  usurious  to  deduct  in  advance  interest  on 
interest  payable  at  a  future  day.^ 

(k)  Charging  market  7-aies  on  time  bills.  Banks  can 
charge  marivct  rates  on  time  bills. ^ 

(l)  Time  price  Jdgher  than  cash  ^;?'^ce.  If  the  time 
price  of  goods  is  higher  than  the  cash  price,  with  lawful 
interest  thereon,^  it  is  not  usurious,*  unless  it  is  a  device 
to  cover  usury  .^ 

{m)  Fluctuating  values.  A  contract  to  return  in  au- 
tumn a  certain  quantity  of  corn,  usurious  in  amount,  is  not 
illegal,  because  corn  fluctuates  in  value,  and  it  cannot  be 
reckoned  in  advance.^  So,  a  "note"  payable  "  in  Balti- 
more bank  notes  with  twelve  and  a  half  per  cent,  inter- 
est" is  not  usurious.^  Where  a  l)ank's  notes  are  payable  in 
bills  of  another  state,  upon  a  renewal  of  the  loan  it  is  not 
usurious  to  take  a  premium  equal  to  the  difference  be- 
tween those  bills  and  other  bills  current  at  the  place  of 
the  bank.^  If  it  is  payable  in  money,  or  in  United  States 
notes,  or  gold  coin,  it  is  usurious.^  If  the  value  of  the 
bills  is  uncertain,  there  is  no  usury  ;^^  and  so,  if  for  the 
loan  of  five  thousand  dollars  and  labor,  the  debtor  prom- 
ises to  board  and  lodge  the  lender's  family  it  is  not  usu- 
rious.^^ 

'  30  S.  C.  Gl  (1888). 

"  13  How.  (U.  S.)  151  (1851). 

3  15  Ind.  50  (18G0)  ;  23  Iowa  185  (1867)  ;  28  Iowa  220  (1869). 

•»  1  Black  (U.  S.)  115  (1861)  ;  75  Ga.  739  (1885)  ;  1  Duv.  (Ky.)  359 
(1864)  ;  4  N.  Y.  (4  Comst.)  225  (1850) ;  72  Teuu.  145  (1879).  See  page 
205. 

*  9  Paige  (N.  Y.)  211  (1841). 

6  12  Fla.  552  (18G9)  ;  59  Ga.  292  (1877)  ;  19  111.  132  (1857). 

">  14  111.  103(1852). 

8  7  Mass.  433  (1811). 

957111.534  (1871). 

10  1  J.  J.  Mar.  (Ky.)  494  (1829) ;  7  J.  J.  Mar.  (Ky.)  37  (1831). 

"  10  C.  E.  Gr.  (N.  J.)  491  (1875)  ;  12  C.  E.  Gr.  (N.  J.)  489  (1875). 
15 


226  THE    LAW    OF    INTEREST. 

(n)  Security  for  first  loan  when  malinrj  second.  In- 
sistino-  upon  security  for  a  former  loan,  as  a  condition  for 
a  subsequent  one  does  not  render  cither  loan  usurious, 
unless  the  object  is  to  obtain  a  larger  premium  or  com- 
pensation for  either  of  the  loans  than  the  law  allows.^ 

(o)  Payment  of  usurious  interest  by  stranger  at  debt- 
or's request.  Where  a  debtor  borrows  money  with  which 
to  pay  a  usurious  debt,  there  is  no  usurious  taint  in  the 
new  contract  because  of  the  usury  in  the  old,  even  if  the 
second  lender  knows  the  purpose  for  which  it  is  to  be 
used  ;  -  and  it  is  the  same  if  the  original  claim  is  void  for 
usury .^  So,  if  a  third  party  gives,  instead  of  money,  his 
note  to  the  original  creditor  in  payment  of  the  usurious 
loan  there  is  no  usury  in  the  new  note.*  An  administra- 
tor has  been  held  to  be  such  a  third  party,  in  a  case  where 
he  gave  his  personal  note  for  a  debt  due  from  his  intes- 
tate, which  included  usurious  interest,  he  not  being  al- 
lowed to  set  up  the  usury  in  the  original  contract.^  If  a 
surety  pays  an  usurious  debt  at  the  debtor's  request,  by 
giving  his  own  note  therefor,  there  is  no  usury  in  the 
new  contract  between  the  surety  and  the  debtor.*' 

So  a  promise  made  by  A  to  pay  B  money  if  B  will  for- 
])ear  suing  C  is  not  usurious  as  it  is  not  between  the 
parties  to  the  subject  matter.^ 

If,  however,  money,  with  which  to  pay  a  valid  debt, 

>  27  Conn.  432  (1858). 

2  IIG  U.  S.  98  (1885)  ;  15  Ind.  257  (1860)  ;  17  Io^Ya  43G  (18G4)  ;  18 
Iowa  540  (1865);  56  Iowa  532  (1881);  63  N.  ^Y.  Rep.  (Iowa)  410 
(1802) ;  54  N.  W.  Rep.  (Iowa)  306  (1893)  ;  4  Laus.  (N.  Y.)  507  (1871)  ; 
83  Va.  659  (1887). 

3  17  Ind.  77  (1861). 

*  5  Allen  (Mass.)  165  (1862);  61  N.  II.  121  (1881). 
^8  N.  II.  276  (183C). 

«  90  111.  283  (1878);  25  Kas.  479  (1881);  18  S.  W.  Rep.  (Ky.)  1034 
(1892). 
'52  Vl.  421  (1880). 


USURY.  227 

is  borrowed  at  an  usurious  rate,  and  the  collateral  of  the 
valid  debt  is  assigned  to  the  second  lender,  the  latter  will 
not  be  secure  from  the  effect  of  the  usury  on  the  collateral.^ 

If  C  borrows  money  of  B,  at  an  usurious  rate  of  inter- 
est to  loan  A,  at  A's  request,  C  cannot  recover  of  A  the 
usury  paid  by  him  to  B.^ 

(P)  Oppressive  contracts.  There  is  a  well  settled  dis- 
tinction between  usurious  and  oppressive  contracts  at  both 
law  and  equity.^  A  contract  is  not  fraudulent  for  usury 
unless  the  usury  is  so  excessive  as  to  render  the  debt  a 
simulated  one.* 

III.  CONTRACTS  TO  EFFECT  USURIOUS  CONTRACTS. 

Usmy  affects  a  contract,^  and  can  be  recovered,"  as  long- 
as  it  can  be  traced  ;  that  is,  it  afiects  all  subsequent  con- 
tracts of  which  it  is  the  basis. ^ 

A  note  given  by  an  indorser  to  an  indorsee  to  take  up 
the  indorsed  paper  does  not  make  a  new  contract,  or  wipe 
out  the  usury  in  the  prior  note  ;  and  on  the  subsequent 
discovery  of  the  usury  the  maker  of  the  second  note  can 
avoid  it.^ 

Although  a  judgment  cannot  generally  be  impeached  for 
usury,  yet  the  consideration  of  a  recognizance  or  statute 
acknowledgment  of  a  debt  may.^  So  a  bill  of  sale  in  a 
trover  suit  may  be  attacked  by  the  defendant  by  showing 
usury.  ^"^ 

»  41  111.  31  (1866). 

2  70Tenn.  137  (1878). 

3  11  Conn.  487  (1836). 

4  45  Ala.  582  (1871). 

=  62  Pa.  St.  481  (1869)  ;  109  Pa.  St.  G25  (1885). 

6  81  Ky.  129  (1883). 

'  78  Tex.  478  (1890). 

8  27  Wis.  177  (1870). 

8  5  Greeul.  (Me.)  374  (1828). 

i"81  Ga.  81  (1888). 


228  THE    LAW    OF    INTEREST. 

(a)  Subsequent  security.  Where  the  original  contract 
is  usurious,  any  subsequent  one  made  to  carry  it  into 
efiect  and  ol)tain  the  fruits  of  it,^  or  given  in  payment  and 
discharge  thereof,^  is  also  usurious  ;  including  securities 
subsequently  givetf  in  renewal  to  the  same  extent  as  the 
debt  itself;  ^  and  it  makes  no  diflerence  whether  the  party 
in  whose  name  the  substituted  security  is  given  was  privy 
to,  or  ignorant  of  the  original  corrupt  agreement  or  not;^ 
nor  whether  it  l)e  given  by  the  del)tor  or  a  third  person," 
or  to  the  administrator  of  the  original  lender;'  there  be- 
ing in  each  case  no  new  consideration.^  So  a  mere  change 
of  securities  to  the  same  person  who  reserved  the  usury 
does  not  purge  the  original  consideration  of  it,'-*  whether 
in  renewal  or  payment  of  the  loan.^*^ 

(b)  lleneical.  A  new  contract  substituted  for  an  usu- 
rious one  is  affected  by  the  usury"  to  the  same  extent  as 


»  1  Campb.  (Eng.)  165  (1807) ;  13  Pet.  (U.  S.)  345  (1839)  ;  2  Conn. 
27G  (1817)  ;  4Hous.  (Del.)  473  (1873)  ;  1  Kelley  (Ga.)  392,  41G  (1846)  ;  2 
Sbepl.  (Me.)  240  (1837)  ;  9  Shepl.  (Me.)  184  (1842)  ;  122  Mass.  495 
(1877)  ;  20  Johns.  (N.  Y.)  285  (1822)  ;  9  Cow.  (N.  Y.)  047  (1823)  ;  13 
Wend.  (N.  Y.)  505  (1835);  2  Denio  (N.  Y.)  621  (184G)  ;  3  Sandf.  Ch. 
(N.  Y.)  313  (1846) ;  5  N.  Y.  (1  Seld.)  178  (1851).  The  security  of  a 
judgment  is  not  affected  by  usury  in  the  debt  on  -niiich  the  judgment 
was  obtained,  says  the  court  in  2  Cai.  (N.  Y.)  150  (1804). 

-  62  Pa.  St.  481  (1869).     See  pages  226  and  248. 

3  3  How.  (U.  S.)  62  (1845)  ;  72  Ga.  807  (1884)  ;  11  Neb.  465  (1881)  ; 
24  Neb.  630  (1888) ;  33  N.  Y.  55  (1865).  Payments  are  to  be  applied 
pro  tanto  to  debt  and  security.  11  Neb.  465  (1881)  ;  24  Neb.  630  (1888). 

*  59  Ga.  546  (1877) ;  72  Ga.  807  (1884).     See  page  225. 

*5  Conn.  154  (1823). 

6  35  Barb.  (N.  Y.)  96  (1861). 

'oStrob.  (S.  C.)  151  (1850). 

"35  Barb.  (N.  Y.)  96  (1861). 

8  57  Ala.  108  (1876). 

'°61  Ala.  507  (1878). 

"  11  Bush  (Ky.)  393,  399  (1875)  ;  5  G.  &  J.  (Md.)  23  (1832) ;  2  Md. 
Ch.  201  (1850)  ;  37  Minn.  441  (1887)  ;  62  Pa.  St.  481  (1869). 


USURY.  229 

the  old  one  ;^  as  where  new  notes  are  given  for  old  ones. 
There  must  be  the  same  promisor,- though  the  promisee  may 
be  the  personal  representative  of  the  original  payee. ^  But 
usury  is  not  a  defence  to  a  suit  on  a  note,  when  the  maker 
renewed  it  in  the  hands  of  a  subsequent  holder,  who  gave 
full  value  for  it,  and  who  had  no  knowledge  of  the  usury.* 

If  any  part  of  the  original  usury  is  carried  into  the  new 
note  it  is  usurious.^ 

"Where  two  or  more  notes  are  given  in  payment  of  a 
note  and  usurious  interest  upon  it,  it  is  presumed  that 
the  usurious  interest  entered  into  the  consideration  of 
each  of  the  notes  in  proportion  to  their  relative  amounts.^ 
So,  if  the  two  notes  are  given,  one  for  the  principal  and  the 
other  for  the  interest,  and  the  latter  is  renewed  annually.^ 

If  a  note  is  given  in  payment  of  a  balance  due  on  an 
usurious  note,  it  is  usurious;^  even  in  the  hands  of  a 
party  to  whom  it  was  given  as  security,  which  usury  an 
indorser  can  plead  in  defence  of  an  action  against  him.^ 

'  23  Ala.  537  (1853) ;  5  Conn.  154  (1823) ;  45  111.  178  (18G7) ;  60  111. 
367  (1871)  ;  3  IVlar.  (Ky.)  419  (1821)  ;  1  Duv.  (Ky.)  239  (1864)  ;  78  Ky. 
513  (1880) ;  10  S.  &  M.  (Miss.)  89  (1848) ;  9  Stew.  (N.  J.)  612  (1883)  ; 
20  Johns.  (N.  Y.)  285  (1822)  ;  9  Cow.  (N.  Y.)  647  (1823)  ;  13  Wend.  (N. 
Y.)  505  (1835)  ;  2  Denio  (N.  Y.)  621  (1846)  ;  2  Sandf.  Ch.  (N.  Y.)  313 
(1846)  ;  5  N.  Y.  (1  Seld.)  178  (1851)  ;  51  N.  Y.  43  (1872)  ;  12  O.  153 
(1843)  ;  1  Dall.  (Pa.)  216  (1787)  ;  85  Pa.  St.  376  (1877)  ;  2  Desau.  (S.  C.) 
333  (1806)  ;  2  Speer  (S.  C.)  83  (1843)  ;  81  Tex.  57  (1891)  ;  53  Vt.  501 
(1881);  16  Wis.  22  (1862). 

2  89  Pa.  St.  328  (1879). 

3  5  N.  H.  376  (1831)  ;  60  N.  H.  452  (1881)  ;  5  Strob  (S.  C)  151  (1850) . 
*  59  Ala.  179  (1877)  ;  2  Conn.  132,  134  (1816) ;  1  Barb.  Ch.  (N.  Y.)  43 

(1815)  ;  14  Hun  (N.  Y.)  414  (1878) ;  21  Vt.  123  (1849).   See  page  248. 

5  13  Ala.  121  (1848). 

«  3  Mou.  (Ky.)  347  (1824)  ;  12  Shepl.  (Me.)  33  (1845)  ;  1  Red.  (Me.) 
414  (1850). 

7 22  Ala.  262  (1853). 

»  12  Iowa  364  (1861)  ;  24  Iowa  441  (1868)  ;  52  Iowa  114  (1879)  ;  19 
S.  W.  Rep.  (Ky.)  171  (1892)  ;  1  Greenl.  (Me.)  167  (1821)  ;  12  Shepl. 
(Me.)  33  (1845) ;  contra,  2  Halst.  (N.  J.)  130  (1824). 

9  1  Greenl.  (Me.)  167  (1821)  ;  12  Shepl.  (Me.)  33  (1845). 


230  THE    LAW    OF    INTEREST. 

If  the  usury  in  the  original  note  is  first  deducted,  and 
the  new  note  is  tlien  given  for  the  principal  and  legal  in- 
terest only  it  is  valid. ^ 

If  a  note  tainted  with  usury  is  renewed  by  a  series  of 
subsequent  notes,  each  renewal  being  accompanied  ])y  a 
new  [)ayment  of  usury,  the  forfeiture  therefor  is  for  all  the 
usurious  interest  paid  and  it  will  be  deducted^  against  an 
indorsee  for  value  and  before  maturity  of  the  last  note.^ 

The  Illinois  court  holds  that  a  subsequent  promise  to  pay 
the  usurious  interest  in  a  contract  is  invalid.* 

If  usurious  notes  in  a  running  account  are  renewed,  the 
usury  affects  all  the  items. ^ 

Usury  does  not  vitiate  a  note  given  l)y  the  party  on 
whom  the  usury  is  practised  to  a  creditor  of  the  usurer,  in 
discharge  of  a  lawful  del )t  due  by  such  usurer,  the  creditor 
having  no  knowledge  of  the  usury. ^ 

Where  an  usurious  indebtedness  has  been  paid  in  full 
and  discharged,  notes  subsequently  given  in  partial  revival 
of  such  indebtedness  are  not  usurious.^  In  a  Kentucky 
case,  decided  some  years  ago,  A  enjoined  a  judgment 
obtained  against  him  by  B  on  the  ground  that  it  was  for 
usurious  interest  which  had  been  reserved  in  various  trans- 
actions between  them,  C  proposed  to  A  to  lend  him  money 
at  an  usurious  rate  of  interest  and  pay  the  cost  of  the  in- 
junction, if  A  would  discontinue  his  proceedings  for  an 


'  13  Ala.  121  (1848);  3  Day  (Conu.)  35G  (1809);  3  Mon.  (Ky.)  347 
(1824).     See  page  247. 

2  83  Ind.  43G  (1882)  ;  21  S.  W.  Rep.  (Ky.)  1050  (1893)  ;  2  Allen 
(Mass.)  551  (18G1)  ;  contra,  98  U.  S.  S55  (1878)  ;  104  U.  S.  52  (1881)  ; 
10  Mass.  121  (1813). 

3  2  Allen  (Mass.)  551  (18C1). 

*  100  111.99  (1883)  ;  108  111.  C33  (1884). 

5  03  Miss.  231  (1885). 

6  3  Lit.  (Ky.)  5  (1823). 
'  57  Io^va  39  (1881). 


USURY.  231 

injunction.  A  agreed  to  the  proposition,  and  executed  a 
note  to  C  for  the  money,  which  was  then  advanced,  and  the 
agreed  interest,  and  also  gave  him  an  order  to  his  counsel 
directing  the  dismission  of  the  suit,  "as  B  had  satisfied  him 
in  full."  Within  five  days  thereafter  C  assigned  the  note, 
without  recourse,  to  B,  who  says  he  then  paid  him  the  said 
sum  of  money.  Suit  was  afterward  brought,  and  judg- 
ment obtained,  upon  the  note  by  B,  and  A  filed  a  bill  for 
an  injunction  against  the  suit,  on  the  ground  of  usury,  and 
it  was  held  that  he  could  set  up  usury  in  the  last  judgment.^ 
The  Kentucky  court  holds  generally  that  usury  may  be 
pleaded  in  defence  to  notes  given  for  judgments  obtained 
on  usurious  consideration.^ 

Sureties  have  the  same  right  on  renewal  notes  as  on  the 
originals.^ 

Where  a  principal  becomes  insolvent,  and  his  sureties 
obtain  indulgence  from  the  creditor  by  agreeing  to  pay 
ten  per  cent  interest  per  annum,  which  they  do,  and  then 
take  a  note  of  their  principal  for  payment,  including  the 
ten  per  cent  interest  paid  by  them,  the  Kentucky  court 
holds  that  the  last  note  is  usurious.* 

Additional  security.  A  legal  note  given  in  renewal  of 
a  prior  note  infected  w^th  usury,  with  different  or  additional 
parties  as  securities,  is  legal. ^  So,  if  the  unlawful  interest 
has  been  paid,  and  a  new  note  is  afterward  given  for  the 
principal  and  legal  interest,  endorsed  by  a  stranger  as 
security.  And  if  they  afterward  take  up  the  note,  giving 
their  own  therefor,  the  makers  of  the  last  note  cannot  have 
the  usurious  interest  originally  paid  deducted  when  suit  is 

15B.  Mon.  (Ky.)  18  (1844). 

2  1  Mon.  (Ky.)  2GG  (1824);  7  Mod.  (Ky.)  353  (1828). 
339  Ind.  106  (1872). 
*2Lit.  (Ky.)  3l'G  (1822). 

»  77  111.  525  (1875)  ;  5  G.  &  J.  (Md.)  23  (1832)  ;  2  Md.  Cli.  201  (1850)  ; 
11  raigc  (N.  Y.)  C35  (1845)  ;  79  Va.  458  (1884). 


232  THE    LAW    OF   INTEREST. 

bi-ouo-ht  on  the  Inst  iiote.^  If,  however,  any  part  of  the 
unhiNvful  interest  is  incUuled  in  the  new  security,  it  is  to 
that  extent  without  consideration .^ 

(c)  AhsoliUe  deed.  If  a  transaction  is  a  loan,  an  ab- 
solute deed  given  for  its  security  will  be  construed  to  be  a 
mortgage,  and  affected  by  the  usury  in  the  loan.^ 

As  between  the  parties  to  such  a  deed,  it  may  be  avoided^ 
by  parol  proof  of  the  usury  f  and  the  rule  is  the  same  if 
the  grantee  quitclaims  the  property  to  a  third  party,  who 
knows  of  the  usury.''  So,  it  may  be  shown  as  a  defence 
to  a  bill  of  foreclosure.^ 

(cZ)  Forbearance.  When  unlawful  interest  has  been 
reserved  or  received  for  forbearance  of  an  originally  valid 
debt,  the  original  agreement  or  security,  is  not  avoided  by 
the  subsequent  usurious  agreement  for  forbearance,^  not- 
withstanding the  security  may  have  been  changed  f  and  it 
is  only  affected  as  a  payment  upon  it  of  the  amount  paid 
for  the  forbearance. ^° 

{e)  JVbvadon.  In  the  novation  of  a  debt,  the  rate  of 
interest  of  the  old  contract  may  be  agreed  upon,  notwith- 
standing the  legal  rate  may  have  been  reduced  below  the 
contract  rate  before  the  novation  took  place. ^^ 

»  0  Mich.  21  (1800)  ;  10  Mich.  148  (18G2). 

2  10  Mich.  148  (1862). 

3  50  N.  Y.  437  (1872)  ;  84  N.  Y.  G27  (1881).  See  59  Barb.  (N.  Y.) 
G51  (1870)  and  14  IIuu  (N.  Y.)  537  (1878). 

*  07  Ga.  713  (1881)  ;  70  Ga.  831  (1883). 

5  7  Conn.  409  (1829) ;  39  Iowa  549  (1874). 

«53  Vt.  202  (1880). 

7  8  Conn.  35  (1830)  ;  53  Vt.  202  (1880). 

«  3  La.  404  (1832)  ;  5  La.  Ann.  505  (1850)  ;  35  Minn.  513  (1886)  ;  ii 
Minn.  218  (1890)  ;  3  N.  H.  185  (1825)  ;  7  Paige  (N.  Y.)  413  (1839)  ;  8 
Paige  (N.  Y.)  548  (1841). 

9  3N.  n.  185  (1825). 

'"17  Iowa  04,  578  (1864). 

"  2  Geo.  (Miss.)  260  (1856). 


USURY.  233 

Where  a  novation  is  by  a  new  party  being  introduced 
for  a  year,  and  then  released  by  consent  of  all,  and  the  old 
contract  resumed,  it  is  still  affected  by  the  original  usury.^ 

So  usury  on  an  old  debt,  if  included  in  a  new,  on  a  no- 
vation, entitles  the  debtor  to  a  deduction  for  such  usury, 
in  a  suit  on  the  new  contract  ,2  in  a  case  where  only  a  part  of 
the  makers  sis-ned  the  new  note. 

{f)  Aivards^  decrees  and  judgments.  Unless  statutes 
give  the  right,  borrowers  cannot  generally  set  up  usury  in 
iudgments,  etc.,  obtained  on  usurious  contracts.  For  a  full 
discussion  of  the  law  on  this  subject,  see  page  295. 

IV.       SUBSEQUENT  CONTRACTS  FOR    USURY. 

(«)  To  ])ay.  A  contract  which,  in  its  inception,  is 
unaffected  by  usury  cannot  be  invalidated  by  any  subse- 
quent usurious  transaction  or  security.^  So,  such  a  con- 
tract is  not  affected  by  a  subsequent  agreement  to  pay 
usury  in  consideration  of  forbearance  ;*  and  where  a  valid 
note  is  discounted  at  an  usurious  rate  of  interest,  and 
the  defendant  afterward  pays  the  interest  and  a  part  of 
the  principal,  and  gives  a  new  valid  note  for  the  residue, 
the  new  note  is  not  infected  with  the  usury. ^ 

Where  a  purchase-money  mortgage  is  set  aside  for  usury 

»59Ga.  546  (1877). 

2  11  Bush  (Ky.)  393  (1875). 

3  1  Pet.  (U.  S.)  37  (1828)  ;  7  Pet.  (U.  S.)  103  (1833)  ;  13  S.  W.  Rep. 
(Ark.)  968  (1892)  ;  3Gr.  (N.  J.)  255,  258  (1836),  509  (1834)  ;  3  Gr.  Ch. 
(N.  J.)  128  (1837)  ;  2  Boas.  (N.  J.)  66  (1860)  ;  1  McCart.  (N.  J.)  153 
(1861)  ;  1  C.  E.  Gr.  (N.  J.)  445  (1863)  ;  2  Cai.  Gas.  (N.  Y.)  C^^^^  (1805)  ; 
19  Johns.  (N.Y)  294  (1822);  13  Wend.  (N.  Y.)  505  (1835)  ;  4  Sandf .  Ch. 
(N.  Y.)  312  (1846)  ;  13  Barb.  (N.  Y.)  561  (1852)  ;  33  Barb.  (N.  Y.)  657 
(1861)  ;  41  Barb.  (N.  Y.)  359  (1864)  ;  44  Barb.  (N.  Y.)  87,  321  (1865)  ;  39 
N.  Y.  28,  325  (1868)  ;  55  N.  Y.  643  (1873)  ;  4  Daly  (N.  Y.)  418  (1873) ; 
2  Bail.  (S.  C.)  574  (1832) ;  3  AVis.  725  (1854). 

*  79  Ala.  76  (1885)  ;  83  Ala.  323  (1887)  ;  9  Ga.  30  (1850). 
^2  Halst.  (N.  J.)  130  (1824). 


234  THE    LAW    OF   INTEREST. 

the  original  debt  is  not  inviilidatctl,  and  remains  an  equit- 
able lien  upon  the  property.^ 

The  subsequent  contract  is  of  course  usurious  so  far  as 
itself  is  concerned;  as,  for  example,  an  agreement  to  pay 
usurious  interest  for  further  forbearance  of  an  existing 
debt,2  Qj,  fQ^.  pjist  forbearance.^  Such  subsequent  agree- 
ment for  forl)earance  will  not  discharge  a  surety  on  the 
original  valid  contract,  however.'  An  usurious  security 
o-iven  for  a  legal  one  is  also  usurious,^  but  the  claim  is 
valid.-^ 

Subsequent  payments  of  usurious  interest  are  regarded 
as  partial  payments  on  the  debt  and  legal  interest.^ 

The  indorsement  of  a  note  for  an  usurious  consideration 
does  not  vitiate  the  note  itself,  and  is  valid  to  pass  title 
to  the  indorsee,  who  can  collect  it  of  the  maker,  says  the 
court  of  Wisconsin.^ 

(b)  To  receive.  If  there  was  originally  a  legal  con- 
sideration the  subsequent  taking  of  an  usurious  instrument 
as  security  does  not  impair  the  original  contract.^  It  is 
the  same  with  the  subsequent  receipt  of  usurious  interest. ^° 

Whore  a  promisor  in  an  usurious  contract  makes  it  the 
consideration  of  a  new  contract  with  a  third  person,  not 
a  paiiy  to  the  original  contract,  or  to  the  usury  ]iaid  or 
reserved  in  it,  and  the  new  contract  is  not  a  contrivance 
to  evade  the  statute,  the  latter  is  not  usurious." 

»  9  Paige  (N.Y.)  211  (1841). 

2  o'JVt.  75(1886). 

3  2  N.  II.  333  (1821)  ;  15  N.  II.  91  (1844). 

*  50  111.  54  (1869). 

*  2  Grat.  (Va.)  372  (1845).     See  page  238. 

«  35  Vt.  503  (1863).     See  sureties,  page  244. 
'  79  Ala.  76  (1885). 
«  3  AVis.  725  (1854). 
9  13  Conn.  249  (1839). 
'0  36  Iowa  516  (1873). 
1'  11  6U..  S.  98  (1885). 


USURY.  235 

An  usurious  note  given  in  payment  of  a  legal  claim  can 
be  recovered  only  to  the  extent  of  the  original  valid  prin- 
cipal and  interest  thereon  up  to  the  time  of  taking  the 
ille£:al  interest  under  the  Florida  statute  which  declares 
the  interest  included  in  an  usurious  contract  void.^ 

If  the  usurious  interest  is  taken  by  the  original  obligee 
it  furnishes  prima  facie  evidence  that  the  agreement  was 
corrupt. - 

Judgment  being  obtained  on  a  debt  secured  by  deed, 
the  creditor  subsequently  made  a  deed  back  to  the  debt- 
or, and  on  execution  levied,  the  debtor  was  not  allowed, 
by  the  Georgia  court,  to  then  set  up  usury  in  the  original 
deed.^ 

If  a  renewal  note  is  invalid,  the  original  contract,  or 
what  remains  of  the  amount  due  upon  it,  if  a  part  has 
been  paid,  continues  to  be  valid  ;^  but  the  holder  can  re- 
cover thereon  only  what  he  could  on  the  second  notc.^ 

V.   LEGAL  CONSIDERATION  OF  USURIOUS  CONTRACTS. 

A  legal  instrument,  debt  or  demand  is  affected  only  in 
the  interest  part  of  it,  and  not  dcstro3^ed  by  being  min- 
gled with  an  usurious  transaction  as  a  part  or  the  whole 
of  its  consideration  f  and  were  it  otherwise  its  redemp- 
tion would  purge  the  taint  of  usury. ^  Principal  and  legal 
interest  of  such  consideration  can  be  recovered.^ 

'  1  Fla.  356  (1847). 

"-  3  Gr.  Ch.  (N.  J.)  128  (1837). 

'  GG  Ga.  102  (1880).     See  page 295. 

*  21  Amer.  Rep.  009  (1876)  ;  64  N.  Y.  294  (187G)  ;  6  Hun  (N.  Y.)  632 
(1876)  ;  79  Va.  597  (1884). 

'  1  Cart.  (Incl.)  32  (1848)  ;  79  Va.  597  (1884). 

M  H.  Bl.  (Eng.)  462  (1790);  88  Ga.  209,  479  (1891);  12  Tick. 
(Mass.)  126  (1831)  ;  1  Barb.  (N.  Y.)  36  (1847)  ;  9G  N.  C.  214  (1887)  ; 
3  Grat.  (Va.)  148  (1846)  ;  6  Vt.  551  (1834). 

7  1  Barb.  (N.  Y.)  36  (1847). 

8  4  Wall.   (U.  S.)  572  (1866)  ;  88  Ga.  209  (1891)  ;  79  Va.  597  (1884). 


236  THE    LAW    OF   INTEREST. 

All  u>iiivr  nets  no  title  to  securities  if  the  oriirinal  eon- 
triict  is  void  in  his  hiinds,  says  the  Ohio  court  •/  ami  the 
supreme  court  of  the  United  States  holds  that  the  in- 
dorsement of  tiio  note  of  a  stranger  and  its  delivery  to  a 
])ank  as  collateral  security  for  an  usurious  loan  passes  no 
title  thereto. 2 

VI.      USUUIOUS    INTEREST    AS    A    CONSIDERATION. 

The  ])aynient  of  usurious  interest  is  sufficient  to  sup- 
port ;i  })romise  of  tbrbearance.^ 

But  a  promise  to  pay  such  interest  in  the  future  is  to 
that  extent  without  consideration.^ 

A  promise  by  the  maker  to  pay  usurious  interest  to  an 
innocent  holder  of  an  usurious  note,  if  he  will  forbear  to 
sue,  isbindinir,  and  may  ])e  enforced  if  the  delay  is  given.' 

If  new  notes  are  given  by  the  maker  to  third  parties, 
and  they  are  assigned  to  the  holders  of  the  original  usu- 
rious notes,  they  are  usurious  also  ;*'  but  if  new  notes  are 
given  to  a  bona  fide  holder,  usury  paid  to  the  original 
payee  cannot  be  deducted  from  the  new  notes,  they  being 
deemed  a  payment  and  discharge  of  the  old  ones.^ 

Where  a  vendor  accepts  his  own  usurious  note  as  part 
of  the  consideration  of  a  contract,  he  does  not  thereby 
sanction  the  usury  ;  and  a  stipulation  that  the  price  of  the 
property  which  the  note  was  given  to  secure  shall  be  rc- 

'  6  O.  St.  19  (1856). 

*  1  Pet.  (U.  S.)  37  (1828). 

••  71  Tex.  241  (1888)  ;  21  Vt.  38  (1848) ;  contra,  a  mortfraiye  may  be 
foreclosed  before  such  period  of  forbearance  is  out.  8  C.  E.  Gr. 
(N.  J.)  554  (1872);  12  C.  E.  Gr.  (N.  J.)  80  (187G)  ;  DO  Ta.  St.  94 
(1879). 

«23  Ind.  4  (1864). 

*8  Ala.  53  (1845). 

8  1  Duv.  (Ky.)  237  (18G4). 

'  1  Duv.  (Ky.)  54  (1863). 


USURY.  237 

ducecl  if  the  usury  is  not  allowed  is  not  binding  on  the 
vendor.^ 

Where  a  surety  in  an  execution  signs  a  replevin  bond 
upon  an  arrangement  with  his  principal,  by  which  the 
latter  gives  him  a  note  binding  himself  to  pay  an  increase 
of  three  per  cent  upon  the  sum  replevied,  in  case  the 
surety  shall  pay  it,  the  transaction  is  usurious.^  Where  an 
assignor  agrees  with  his  assignee  that  in  the  event  of  the 
insolvency  of  the  obligor  in  the  assigned  note,  he  will  re- 
fund more  than  the  consideration  and  legal  interest,  it  is 
usurious.^ 

VII.       SUBROGATION. 

No  equitable  right  of  subrogation  to  securities  can  arise 
where  in  order  to  establish  it  resort  must  be  had  to  an 
agreement  which  is  void  by  reason  of  usury.  For  ex- 
ample, where  A  borrows  money  of  B,  and  gives  his  abso- 
lute deed.  A  afterward  borrows  money  at  usurious  in- 
terest of  C  to  pay  the  loan,  and  gets  B  to  convey  the  land 
to  C.  It  is  held  that  C  will  not  be  subrogated  to  the  rights 
of  B.* 

VIII.      PARTIES. 

(a)  Agents.  If  a  person  knows  that  he  is  dealing  with 
an  ao;ent  of  another  the  law  deems  him  to  be  dealing?  with 
the  principal.^ 

If  an  agent,  without  authority  from,  knowledge  of,  or 
subsequent  ratification  of  his  principal,  makes  an  usurious 
contract,  the  principal  is  not  bound  by  it,*'  as  where  an 

'  9  B.  Mon.  (Ky.)  468,  469  (1849). 

2  3  Dana  (Ky.)  362  (1835). 

3  4  J.  J.  Mar.  (Ky.)  276  (1830). 
*  53  Ark.  273  (1890). 

5  25  Mich.  447  (1872). 

«  116  U.  S.  98  (1885) ;  51  Ark.  534,  548  (1889)  ;  54  Ark.  40  (1890)  ; 
90  111.  281  (1878)  ;  51  Iowa  398  (1879)  ;  3  Laus.  (N.  Y.)  34  (1870)  ;  54 
N.  Y.  360  (1873)  ;  55  Hun  (N.  Y.)  171  (1889)  ;  10  Vt.  548  (1838)  ;  16 
Wis.  259  (1862)  ;  36  Wis.  390  (1874). 


238  THE    LAW   OF   INTEREST. 

Mircnt  takes  two  notes  for  the  loan,  one  to  the  principal 
-with  leiral  interest,  or  with  none,  and  tlic  other  to  himself 
for  the  excess  al)ovo  tlie  legal  interest.^ 

"When  Ji  principal  learns  of  his  agent's  nsnrious  con- 
tract he  mnst  retnrn  the  excess  of  interest,  or  annul  the 
contract.-  The  ]\Iiunesota  court  holds  that  the  principal  will 
be  bound  by  the  agent's  contract  if  he  sanction  it,  even 
when  tne  usury  is  taken  for  tlie  agent's  own  benefit.^ 

AVhere  an  usurious  security,  including  the  usury,  is  for 
a  larger  sum  than  the  principal  knows  he  ought  to  have, 
and  without  an  explanation  ho  accepts  and  has  the  benefit 
of  it,  it  is  an  adoption  and  ratification  by  him.^  But  if  the 
agent  takes  an  absolute  deed  as  a  security  it  will  be  deemed 
a  mortgage,  and  the  principal  by  accepting  the  deed  for  the 
principal  and  legal  interest  does  not  thereby  ratify  the  act 
of  the  agent  in  exacting  the  usury. ^  Taking  a  mortgage 
and  enforcing  it  for  tlic  amount  loaned  and  lawful  inter- 
est, does  not  constitute  a  ratification  of  the  agent's  illegal 
act.« 

The  written  authority  of  a  principal  to  his  agent  to 
make  loans  does  not  exclude  oral  evidence  of  advice,  etc. 

There  is  no  presumption  that  an  agent  has  authority 
from  his  principal  to  violate  the  law,^  nor  that  the  prin- 
cipal knew  of  the  agent's  act.''  The  Connecticut  and 
Massachusetts  courts  hold,  however,  tliat  authority  to 
make  an  usurious  loan  is  not  presumed  when  tlie  agency 
is  specified  and  limited  to  a  single  transaction,  but  that  it 

'  lie  U.  S.  98  (1885)  ;  33  Conn.  81  (1SC5). 

2  92  N.  Y.  34  (1S83). 

=»4GMinn.  300  (1891). 

*  130  N.  Y.  102  (1891). 

"  52  N.  ^y.  Rep.  (Minn.)  39  (1892). 

«31  Minn.  495  (1884). 

MGMinn.  3G0  (1891). 

«  53  Fed.  Rep.  (Art.)  410  (1892). 

»  3  Lans.  (N.  Y.)  34  (1870;. 


USURY.  239 

may  be  presumed  when  the  agency  is  general,  and  the 
business  that  of  makinsr,  mana2:in2:  and  collecting:  the  loans 
of  a  principal.^  But,  being  a  presumption  of  fact,  it  may  be 
rebutted.^ 

If  an  agent,  authorized  to  purchase  securities,  buys  a 
note  and  mortgage  for  his  principal,  knowledge  of  the 
usury  by  the  agent  does  not  affect  the  principal.^ 

Liability.  An  agent  is  not  excused  from  personal  lia- 
bility on  an  usurious  contract,  if  he  does  not  disclose  his 
agency  at  the  time  the  transaction  occurs,*  even  though  he 
intends  the  note  for  his  principal.^  Where  a  note  for  bor- 
rowed money  is  given  to  an  agent  without  the  borrower's 
knowledge  of  the  agency,  supposing  the  agent  to  be  the 
actual  lender,  it  is  usurious,  if  it  includes  illegal  inter- 
est, although  it  might  not  have  been  usurious  between  the 
borrower  and  the  principal,  had  the  principal  been  dis- 
closed.'' 

An  agent  who  has  received  usurious  interest  for  his  prin- 
cipal, and  has  been  notified  before  he  paid  it  over  that  he 
will  be  held  personally  accountable  for  it  to  the  party  pay- 
ing it,  cannot  shield  himself  by  claiming  that  the  suit 
should  have  been  brought  against  the  principal.^ 

BonuSf  etc.  The  decisions  regarding  the  right  of  an 
agent  to  receive  a  bonus,  etc.,  are  not  in  harmony,  but  the 
following  statement  is  believed  by  the  writer  to  be  correct 
in  principle.  The  borrower's  agent  has  the  right  to  re- 
ceive a  bonus  from  him,^  and  the  lender's  agent  has  also 

>  33  Conn.  81  (ISGo)  ;  7  Gray  (Mass.)  287  (1S5C). 
"  33  Conn.  81  (1865). 
3  ISKas.  529  (1877). 

*-23  Ala.  537  (1853)  ;  5  Mass.  53  (1S09)  ;  43  Vt.  249  (1870). 
s  23  Ala.  537  (1853);  3  Hawks  (X.  C)  28  (1821);  3  Dev.  (N.  C.)  43 
(1831);  43  Vt.  249  (1870). 
«  53  Iowa  G27  (1880). 
'  GO  Miss.  349  (1882). 
8  53  Fed.  Eep._(Ark.)  410  (1892). 


240  THE    LAW    OF    INTEREST. 

the  right  to  receive  a  bonus  or  compensation  from  the  bor- 
rower, and  it  does  not  make  the  h):ui  usurious  to  the 
lender.'  even  when  there  is  an  agreement  between  the 
principal  and  his  agent  that  the  latter  may  receive  such 
bonus  and  nothing  more  for  his  services  from  liis  princi- 
pal ;-  and  it  makes  no  diflerence  Avhethcr  the  brokerage  is 
secured  separately  or  taken  from  the  loan.^  So,  on  for- 
bearance.* 

Neither  is  it  usurious  when  the  lender's  agent  is  paid  by 
the  borrower  for  legal  services,  drawing  papers,  etc., 
Avithout  the  knowledge  of  the  lender.^ 

In  all  these  cases,  however,  the  jury  have  a  right  to 
consider  the  amount  of  the  bonus,  etc.,  received  in  the 
light  of  the  value  of  the  service  performed  by  the  agent, 
and  if  it  is  grossly'  unreasonable  they  can  legally  assume 
that  it  is  for  tiie  use  of  the  lender  and  therefore  an  usuri- 
ous transaction. '^ 

The  fact  that  the  lender's  agent  uses  his  power  with  re- 
gard to  making  a  loan  to  induce  the  borrower  to  subscribe 
and  pay  for  some  stock  in  a  corporation  in  which  the  agent, 
and  not  the  lender,  is  interested,  and  which  afterward 
proves  worthless,  docs  not  constitute  usury. ^ 

1  28  Minn.  211  (1881)  ;  31  Minn.  495  (1884)  ;  33  Minn.  194  (1885)  ;  35 
Minn.  513  (188G)  ;  contra,  4b' Minn.  3(J0  (1891);  5  Neb.  2GI  (1S7G)  ;  6 
Neb.  151  (1877).  If  the  principal  does  not  know  it.  1  Stew.  (N,  J.) 
5G8  (1877)  ;  2  Stew.  (N.  J.)  454  (1878)  ;  14  Stew.  (N.  J.)  G3,  92  (ISSG)  ; 
IG  Stew.  (N.  J.)  15  (1887)  ;  21  Barb.  (N.  Y.)  181  (1855)  ;  21  N.  Y.  219 
(18G0);  32  N.  Y.  1G5  (18G5)  ;  45  Barb.  (N.  Y.)  422  (1SG5);  81  N.  Y. 
352  (ISSO)  ;  92  N.  Y.  34  (1883)  ;  C8  Tex.  593  (1837). 

-28  Minn.  211  (1881);  31  Minn.  495  (1884);  33  Minn.  194  (1885); 
35  Minn.  513  (188G)  ;  3  C.  E.  Gr.  (N.  J.)  481  (18G7). 

3  7  Paige  (N.  Y.)  413  (1839)  ;  3  Sandf.  Ch.  (X.  Y.)  5G4  (1S4G). 

*  4  Stew.  (N.  J.)  381  (1879)  ;  contra,  it  will  be  usurious,  2  Va.  Cas. 
471  (1825). 

*  19  Ilun  (N.  Y.)  227(1879). 

«  54  N.  W.  Rep.  (Minn.)  591  (1893). 
'2G  Wis.  473  (1870). 


USURY.  241 

The  president  of  a  bank  compelled  a  borrower  from  the 
bank  to  pay  him  a  commission  in  addition  to  the  interest 
paid  to  the  bank,  and  also  to  buy  from  him  some  worth- 
less stocks,  as  a  condition  to  obtaining  the  loan ;  but  it 
did  not  appear  that  the  bank  received  the  commission  or 
was  l)encfited  by  the  sale  of  the  stock,  and  it  was  held, 
that,  under  those  facts,  the  transactions  did  not  render 
the  loan  usurious.^ 

Where  an  agent  has  an  agreement  witli  his  principal 
that  all  commissions  on  loans  and  all  bonuses  payable  by 
borrowers  shall  belong  to  the  principal,  he  is  presumed  to 
be  acting  for  the  principal  in  collecting  usurious  interest 
when  the  principal  knows  of  it,  thousfh  the  agent  actually 
receives  all  such  benefits.^ 

Where  one  trustee  receives  an  usurious  bonus  for  loan- 
ing money  of  the  estate,  and  the  other  trustees  know 
nothing  of  it,  it  does  not  aifect  the  mortgage  they  hold.^ 

An  agent  cannot  receive  a  bonus  for  a  loan,  and  then 
loan  his  own  money,  as  it  is  usurious.*  Neither  can 
he  borrow  the  money  he  is  lending  from  a  third  person, 
and  be  free  from  usury. ^ 

A  borrower's  agent  may  exact  a  bonus,  and  it  will  not 
have  an  usurious  effect  upon  the  loan,^  if  the  lender  re- 
ceives none  of  it. 

An  agent  with  whom  money  is  deposited  l)y  his  princi- 


'  32  N.  E.  Rep.  (111.)  53i  (1892). 

2  30  Pac.  Eep.  (N.  M.)  859  (1892). 

3  12  Hun  (N.  Y.)  574  (1878)  ;  16  Hnu  (N.  Y.)  209  (1878). 

"  8  C.  E.  Gr.  (N.  J.)  174  (1872)  ;  11  C.  E.  Gr.  (N.  J.)  218  (1875)  ;  8 
Cow.  (N.  Y.)  299  (1828)  ;  5  Wend.  (N.  Y.)  181  (1830)  ;  1  N.  Y.  Leg. 
Obs.  107  (1842)  ;  3  N.  Y.  (3  Comst.)  470  (1850)  ;  21  Barb.  (N.  Y.) 
181  (1855). 

SQCow.  (N.  Y.)  647  (1823). 

«3  Neb.  256  (1874);  13  Neb.  157  (1882);  27  Neb.  880  (1889);  20 
Wis.  407  (1866)  ;  33  Wis.  252  (1873);  34  Wis.  550  (1874). 
16 


242  THE    LAW    OF    INTEREST. 

pal  to  be  loaned  on  usurious  terms  cannot  set  up  usury 
Ijy  Avay  of  defence  in  an  action  by  his  principal  for  the 
balance  in  his  hands. ^ 

A  factor  cannot  charge  a  commission  for  advancing 
money,  and  full  legal  rate  of  interest  on  the  money  ad- 
vanced, as  it  is  then  usurious. - 

(b)  Uanks.  Usury  laws  affect  banks,  being  applicable 
to  them  generally  as  to  individuals,^  unless  otherwise 
affected  by  statute.* 

A  clause  in  the  charter  of  a  bank,  limiting  interest  on 
discounts,  does  not  apply  after  the  breach  of  a  contract.^ 

(c)  Indorsers  and  guarantors.  If  an  indorsee  of  an  usu- 
rious note  fails  to  recover  of  the  maker  because  of  usury, 
he  can  collect  the  amount  due  by  the  note  (except  the 
costs  of  his  action  against  the  maker)  of  his  indorser, 
who  was  the  payee,*^  that  is,  the  indorser  cannot  set  up 
usury  originally  in  the  note  ;^  l)ut  if  the  usury  is  l)etween 
the  indorser  and  indorsee  he  can  do  so.^ 

In  New  Jersey,  where  the  statute  declared  that  every 
usurious  contract  was  void,  it  was  held  that  if  the  con- 
tact between  the  indorser  and  indorsee  were  usurious,  the 
latter  could  maintain  no  action  against  the  maker  or  any 
party  prior  to  the  indorsement,  although  the  instrument 
was  good  in  its  creation,  because  he  can  get  no  title  to  it 
by  the  indorsement. ° 

'  14  Iowa  251  (18G2). 

2  5  La.  Aun.  505,  547  (1850)  ;  12  La.  Ann.  20,  723  (1857)  ;  47  Pa.  St. 
485  (18G4). 

3  49  Tenn.  173  (1872);  G3  Tenn.  499  (1872);  5  Rand.  (Va.)  132 
(1827)  ;  10  Wis.  230   (1860)  ;  13  Wis.  216  (1860)  ;  18  Wis.  102  (1864). 

*  63  Tenn.  499  (1S72). 

<*  9  Wend.  (N.  Y.)  471  (1833). 

«  9  Mass.  1  (1812). 

7  6  Hill  (N.  Y.)  492  (1844). 

8  2Brev.  (S.  C.)  199  (1807). 

9  2IIaiT.  (N.  J.)  191  (1839). 


USURY.  243 

Though  an  inclorser  cannot  be  compelled  to  pay  more 
than  the  amount  he  received,  -with  interest,  yet,  if  he  pay 
voluntarily,  equity  will  not  relieve.^ 

If  a  note  stipulates  for  interest  anterior  to  its  date,  it 
does  not  put  the  indorsee  upon  inquiry  about  usury. ^ 

Accommodaiion  indorsers.  A  stranger  may  legally  take 
a  bonus  for  his  indorsement.^ 

Notes  are  not  affected  by  an  agreement  of  the  maker 
which  estops  him  from  interposing  the  defence  of  usur}'.* 

A  discount  greater  than  the  legal  rate  is  not  sucii  fraud 
on  accommodation  indorsers  as  to  discharire  them.^ 

An  accommodation  indorser  of  a  note  who  takes  it  up 
at  maturity,  in  ignorance  of  the  fact  that  it  has  been  dis- 
counted at  an  usurious  rate,  may  maintain  an  action  against 
the  maker  for  reimbursement.'' 

Guarantors.  If  a  note  is  usurious  to  the  maker  it  is 
also  usurious  to  a  i^uarantor.^ 

Where  a  note  is  sold  and  transferred,  and  a  guaranty 
of  its  payment  given  in  consideration  of  a  sum  less  than 
the  amount  due  on  the  note,  it  is  not  usurious.^ 

Indorsers  and  guarantors  of  notes  usuriously  discounted 
for  them  by  third  persons  are  liable  thereon  to  the  holder, 
notwithstanding  the  usury. ^ 

Where  a  person,  innocent  of  usury,  indorses  an  usu- 
i-ious  note,  the  indorsement  is  void,  the  statute  makinir 
usurious  contracts  void.^*^ 

1  26  Tenn.  451  (1846). 

2  5  Tex.  171  (1849). 

3  29N.  Y.  515  (18G4). 

*  2  Weekly  Dig.  (N.  Y.)  441  (1876). 

*  49  Tenn.  173  (1872). 

6  11  Hull  (N.  Y.)  119  (1877). 
'28  S.  C.  504  (1887J. 

8  21  Wend.  (N.  Y.)  285  (1839)  ;  Hill  &  D.  Supp.  (N.  Y.)  252  (1843)  ; 
13  Barb.  (N.  Y.)  45  (1852)  ;  10  N.  Y.  (0  Seld.)  198  (1854). 

9  52  Md.  78  (1879)  ;  28  Wis.  198  (1871). 
'0  2  McC.  (S.  C.)  178  (1822). 


244  THE     LAW    OF    INTEREST. 

(d)  Partners.  A  lender  can  recover  of  a  firm  the 
principal  and  legal  interest  of  a  note  signed  l)y  one  of  the 
partners  in  the  firm's  name  ;^  bnt  one  partner  individnally 
cannot  sue  ^hen  the  borrower  is  his  firm.-  And  in  an 
action  alleging  partnership,  and  asking  dissolution  and  an 
accounting,  the  plaintiff  cannot  recover  on  proof  of  a  loan 
bearing  legal  interest  besides  a  share  of  the  profits,  as  it 
is  usurious.^ 

"When  one  of  two  partners,  without  the  knowledge  of 
the  other,  borrows  money  at  usurious  interest,  and  exe- 
cutes a  note  in  the  firm-name,  afterward  paying  the  in- 
terest, and  the  other  partner,  ignorant  of  the  payment  of 
the  usury,  executes  his  own  note  in  lieu  of  the  others,  he 
cannot  set  up  in  defence  the  plea  of  usury  by  his  partner 
when  sued.^ 

Where  one  partner  sold  out  to  another  calling  the  value 
of  the  proper!}-  ten  per  cent  more  than  it  was  worth,  Ijy 
agreement,  and  notes  then  being  made  for  that  amount  to 
run  for  several  3'ears  at  the  highest  legal  rate  of  interest  it 
was  held  to  be  usury  .^ 

If  one  partner  tells  another  not  to  pay  certain  debts 
because  they  are  usurious,  and  the  other  partner  then  pays 
them,  the  first  can  recover  his  share  of  the  usury  from 
the  other  partner  on  accounting.'^ 

A  loan  at  usurious  interest  of  money  to  l)e  employed  in 
the  borrower's  business  does  not  make  the  lender  a  part- 
ner." 

(e)  Sureties.  An  usurious  contract  for  an  extension  of 
the  time  of  payment  of  a  note,  will  not  discharge  a  surety 

'  40  Ga.  107  (18G9). 

*  50  Tcnu.  242  (1873). 

='G2N.  y.  508  (1875). 

M4  Ala.  18G  (1848). 

*2  Spear  (S.  C.)  238  (1843). 

«  50  N.  W.  Rop.  (Iowa)  CO  (1891)  ;  57  Mo.  399,  503  (1874). 

^  72  ra.  St.  244  (1872). 


USURY.  245 

thereon  ;^  but  the  payment  of  usurious  interest  is  suffi- 
cient to  support  a  promise  of  forbearance  and  will  dis- 
charge a  surety.-  The  court  in  Georgia  holds,  however, 
that  a  surety  is  discharged  when  the  creditor  agreed  to 
take  a  mortgage  with  waiver  of  homestead  right,  and  took 
one  that  was  void  for  usury. ^ 

A  surety  may  set  up  usury  as  a  defence  to  a  note,  given 
in  renewal  of  others,  when  the  nsurious  interest  was  paid 
on  the  original  note.*  A  surety  may  set  up  usury  even 
though  his  principal  has  waived  it.^ 

Sureties  are  usually  held  for  the  principal  and  legal  in- 
terest, whether  they  knew  of  the  usury  in  the  note  or  not.^ 

If  a  surety  on  a  note,  by  request  of  the  maker,  who 
agrees  to  be  jointly  responsible  Avitli  him,  pays,  after  ma- 
turity, usurious  interest  thereon,  he  may  recover  what  he 
has  paid  of  the  maker, '^  it  being  paid  as  between  him  and 
the  maker,  at  the  request  of  and  for  the  use  of  the  prin- 
cipal ;  and  it  makes  no  difference  that  a  part  thereof  was 
usurious  interest  and  not  collectible  of  the  surety,  nor 
that  part  of  it  had  accrued  after  maturity.^  But  if  the 
surety  knows  of  the  usury  and  voluntarily  pays  it,  he  can- 
not afterward  recover  it  of  his  principal.^ 

A  deed  to  indemnify  a  surety  is  not  void  for  usury  in 
the  original  debt^*^  reduced  to  judgment;  and  such  usury 
does  not  affect  a  surety  who  pays  the  judgment. ^^ 

'  IG  Ind.  248  (18G1)  ;  12  Kas.  500  (1874)  ;  95  Pa.  St.  65  (1880)  ;  U 
Tex.  600  (1855)  ;  C07itra,  108  N.  C.  245  (1891). 

*  71  Tex.  241  (1888)  ;  21  Vt.  38  (1848). 
'81  Ga.  691  (1888). 

•*39Incl.  106  (1872). 

*  15  S.  E.  Rep.  (Ga.)  483  (1892). 
«  3  O.  St.  302  (1854). 

'  25  Iowa  555  (1868)  ;  48  Iowa  26  (1878)  ;  7  B.  Mou.  (Ky.)  388  (1847). 

»  1  Kelly  (Ga.)  140  (1846)  ;  51  Vt.  253  (1878). 

3  3  Kelly  (Ga.)  102  (1847)  ;  8  Ga.  502  (1850). 

'"76  Ga.  669  (1886). 

11  74  Ga.  701  (1885)  ;  22  Tenn.  547  (1842). 


240  THE    LAAV    OF    INTEREST. 

If  one  of  sevenil  sureties  has  been  compelled  to  pay 
usurv,  he  ni;iy  recover  a  proportionate  part  of  what  he 
has  paid  of  his  co-sureties.^ 

If  a  surety  gives  his  own  note  for  tho  usury,  he  cannot 
set  up  usury  in  a  suit  upon  it,  it  being  deemed  a  payment 
or  purchase,  and  not  a  renewal. ^ 

IX.       rUllGING    CONTRACTS    OF   USURY. 

(a)  Bij  agreement.  A  borrower,  by  a  contemporane- 
ous airrcement,  cannot  w^aive  the  right  to  retain  or  re- 
cover usurious  interest  paid,'^  or  waive  the  right  to  set  up 
the  defence  of  usury. ^ 

A  usurious  contract  that  is  void  by  statute  cannot  be 
afterward  so  confirmed  as  to  make  it  available  to  cither 
party.' 

Contracts  may  l)e  purged  of  the  usury  contained  in 
them  by  an  accounting  and  taking  out  the  usury,  new 
security  being  given  for  the  balance.^  A  bona  fide  agree- 
ment to  free  it  will  be  sufficient,"  and  it  Avill  afterward 
stand  as  a  legal  contract.  If  the  maker  of  a  note  promises 
to  irive  a  new  note  less  the  usurious  excess  of  interest,  on 
the  promise  of  the  holder  to  cancel  the  original  note,  it  will 
be  enforced  in  law.^ 

A  renewal  does  not  purge  the  original  usury,  unless  the 
agreement  is  discharged,  or  it  combines  new  parties  and 
has  a  new  consideration,  and  not  then  if  it  is  done    to 

'  25  Iowa  555  (18G8). 

2  48  Iowa  2G  (1878). 

3  72  Pa.  St.  5-t  (1872). 

*  22  Hun  (N.  Y.)  2C4  (1880). 

*8  W.  &S.  (Pa.)  31(1844). 

«  1  Kelley  (Ga.)  410  (1840)  ;  G  Ga.  253  (1849). 

'  10  Wheat.  (U.  S.)  3G7  (1825);  28  Ind.  435  (18G7)  ;  2  Ilalst.  Ch. 
(N.  J.)  253  (1847),  625  (1848);  7  C.  E.  Gr.  (N.J.)  438  (1871),  GOG 
(1872)  ;  11  C.  E.  Gr.  (N.  J.)  548  (1875)  ;  13  Wcud.  (X.  Y.)  505  (1835)  ; 
4Dcnio  (N.  Y.)  104  (1847). 

8  12  Iowa  3GI  (1861)  ;  52  Iowa  114  (1879)  ;  7  Vt.  210  f  1835). 


USURY. 


247 


evade  the  statute.^  So,  after  usurious  securities  have  been 
destroyed  by  mutual  consent,  a  promise  by  the  borrower 
to  repay  the  principal  and  interest  is  founded  on  a  suffi- 
cient consideration  and  is  binding.^ 

A  transfer  by  the  creditor  to  the  debtor's  wife  of  the 
property  of  the  debtor  which  is  held  as  security  for  an 
usurious  debt,  and  the  taking  of  a  new  security  from  the 
debtor  and  his  wife  on  the  same  property  for  the  same 
debt  does  not  remove  the  taint  of  usury .^ 

But  a  mortgage  given  to  secure  an  usurious  note  cannot 
be  validated  by  crediting  the  note  with  the  amount  of  the 
usury .^  Where  the  holder  of  a  note  after  suit  brought, 
without  knowledge  of  the  maker,  and  without  actually 
receiving  anything,  indorses  on  it  a  sum  insufficient  to 
reduce  it  to  the  amount  of  the  principal  and  legal  inter- 
est, it  is  still  usurious.^ 

(b)  By  payment.  To  be  a  payment  it  must  be  so  in- 
tended by  the  parties.^  The  borrower  of  money  on  an 
usurious  consideration  may  waive  the  benefit  of  the  stat- 
ute by  making  payment ;  and  if  he  pay  the  usurious  debt 
to  a  third  party,  a  new  security  given  by  such  third  party, 
in  consideration  thereof,  will,  in  the  absence  of  a  contriv- 
ance to  evade  the  statute,  be  valid. ^ 

A  settlement  by  note  is  a  good  defence  to  a  suit  for  us- 
ury, if  none  of  the  usury  enters  into  the  new  one,^  unless 
it  is  a  device  to  cover  usury,  w^hen  it  is  not  a  defence.'' 

'  5  G.  &  J.  (Md.)  23  (1832)  ;  2  Md.  Ch.  201  (1850).  See  page  228. 

2  17  Ark.  138  (185G)  ;  91  N.  Y.  124  (1883). 

3  37  Minn.  182  (1887). 

^  35  Ark.  217  (1879)  ;  4  Denio  (N.  Y.)  104  (1847). 
^  5  Hubb.  (Me.)  544  (1861). 

6  83N.  C.  211  (1880). 

7  2  Conn.  276  (1817)  ;  5  Conn.  154  (1823)  ;  IS  Grat.  (Va.)  909  (1868). 

8  125  111.  91  (1888)  ;  11  Bush  (Ky.)  393  (1875). 

9  88N.  Y.  62  (1882). 


248  THE    LAW    OF   INTEKEST. 

If  payment  is  made  by  a  conveyance  of  land  the  title  is 
irood,^  if  it  is  an  absolute  conveyance  and  given  in  satis- 
faction of  the  debt ;  2  but  otherwise  if  it  is  only  given  to 
secure  the  debt. 

A  new  note  given  for  the  principal  and  legal  interest 
only,  by  the  maker  to  the  holder,  who  is  other  than  the 
payee,  for  an  usurious  note  is  valid ^  and  will  purge  the 
usurv.  But  the  remission  of  a  part  of  the  usury  and 
ixiving  a  note  for  the  balance  will  not  purge  it.^ 

To  be  conclusive,  accord  and  satisfaction  in  settlement 
for  usury  must  not  leave  the  debtor  in  vincuUs  to  the 
creditor.^  Even  though  the  sum  advanced  is  less  than  the 
usury  paid,  if  it  is  accepted  as  a  full  discharge  of  the  bor- 
rower's claim  it  is  good  ;'^  but  if  it  is  for  only  a  part  of 
the  usury  it  is  not  sufficient,  that  is,  to  defeat  a  subsequent 
claim  by  the  creditor, Uhough  it  is  agreed  to  be  so.^  If 
the  payment  is  in  property  reckoned  at  much  more  than 
its  vendable  value  there  can  be  no  reclamation  of  the  u^ury 
if  such  be  the  agreement ;  ^  and  it  is  also  true  if  in  addi- 
tion to  the  price  there  is  an  agreement  that  the  value  of 
the  property  over  and  above  the  amount  of  the  principal 
and  legal  interest  shall  be  in  satisfaction  of  the  usury  in 
the  claim,  and  the  creditor  gives  a  note  for  the  excess 
over  the  legal  amount  due  and  pays  it.^*^ 

Free  and  voluntary  performance,  by  payment  of  money 

»  r,7  Ga.  713  (1881)  ;  78  Ga.  220  (188G). 
=  31  N.  E.  Hep.  (III.)  503  (1892)  ;  17  Ind.  77  (ISGl). 
3  3  J.  J.  Mar.  (Ivy.)  683  (1830)  ;  7  Wend.  (N.  Y.)  250  (1831)  ;  20 
Wis.  G71  (18G0).  See  pages  228  and  229. 
^■IB.  Mon.  (Ky.)372  (1814). 
*G3  Ga.  78  (1879). 
«5-IGa.  15  (1875). 
'  24  ra.  St.  215  (1855). 
8  54  Ga.  15  (1875)  ;  39  Pa.  St.  3G1  (18G1). 
»  10  B.  Mon.  (Ky.)  220  (1849). 
'"54  Ga.  15  (1875). 


USURY.  249 

or  otherwise,  of  an  usurious  contract  bars  relief  in  the 
courts  ;  ^  but  it  must  not  be  done  to  evade  the  usury  stat- 
ute.^ Such  payment  may  be  followed  by  another  loan  ; 
but  such  payment  must  not  be  by  another  ol)ligation  of  the 
same  parties,  although  there  is  an  engagement  of  a  new 
surety,  except  only  where  an  innocent  third  person  inter- 
venes.'^ 

A  mercantile  account  rendered  and  accepted  is  deemed, 
by  the  Louisiana  court,  a  payment  of  all  the  items  that 
make  it  up  ;  so  it  is  settled,  and  only  such  usurious  pay- 
ments included  therein  as  were  made  within  the  statutory 
period  can  be  recovered.* 

When  a  lender  refunds  the  usury  paid,  it  purges  the  con- 
tract of  the  usury,  if  it  is  agreed  that  from  that  time  only 
lawful  interest  shall  be  charged.^ 

The  foreclosure  of  an  usurious  mortgage  by  sale  under 
the  power  does  not  prevent  equitable  relief  from  the 
usury.  ^ 

X.       RELIEF   FROM"  USURY. 

Neither  party  will  be  held  to  an  usurious  contract  while 
it  is  executory.^  Usury  is  not  an  unconscionable  de- 
fence ;  ^  and  equity  will  cause  equity  to  be  done  in  giving 
relief.^  Kelief  is  generally  given  in  proper  cases  ;  but 
where  a  debtor  gives  an  usurious  bond  with  the  creditor, 
he  has  no  relief  against  the  latter. ^*^ 

1  67  Mich.  237  (1887)  ;  62  Pa.  St.  481  (1869). 

2  62  Pa.  St.  481  (1869). 

3  62  Pa.  St.  481  (1869). 

4  39  La.  Ann.  788  (1887). 

5  53  Iowa  719  (1880). 

6  37  Minn.  182  (1887). 

'8C.  E.  Gr.  (N.  J.)  554  (1872). 
«  1  Stew.  (N.J.)  398  (1877). 

8  69  Miss.  770  (1892)  ;  2  Desau.  (S.  C)  333  (1806)  ;  2  Rich.  Eq.  (S.  C) 
63  (1845). 
10  6  Miinf.  (Va.)  541  (1820). 


250  THE    LAW    OF    INTEREST. 

(a)  Directly  in  equity.  Usury  is  not  regarded  as  pe- 
culiarly an  equitable  defence  ;^  it  can  be  set  np  in  delence 
of  a  suit  at  law  against  the  debtor. - 

Equity  will  relieve  from  usury  only  when,  from  the 
form  of  the  security,  the  defence  cannot  be  made  avail- 
a1)lc  at  law,  or  when  the  interest  sought  to  be  avoided  is 
a  cloud  upon  the  title  to  land,  or  some  other  necessity 
for  the  interposition  of  a  court  of  equity  is  shown. ^ 

Equity  will  not  aid  if  the  remedy  at  law  was  not  em- 
l)raced  when  it  could  have  been.*  The  Maryland  court, 
however,  holds  that  even  then  a  party  can  have  relief  if 
he  comes  in  within  a  reasonable  timo.^ 

1.  By  horrou'ers.  Until  the  borrower  asks  to  be  re- 
lieved from  paying  usurious  interest  the  other  party  may 
regard  the  Avhole  contract  as  valid.''  The  borrower  can 
only  obtain  relief  by  offering  in  his  bill  to  pay  the  amount 
of  the  principal  and  legal  interest  due,'  even  if  the  stat- 

'  2  Beas.  (N.  J.)  253  (18G1)  ;  3  C.  E.  Gr.  (N.  J.)  481  (lSr,7). 

2  8  S.  &  M.  (Miss.)  131  (1847);  11  S.  &  M.  (Miss.)  140(1848);  2 
Cush.  (Miss.)  509  (1852). 

3  49  N.  Y.  373  (1872),  reversing  3  Lans.  (N.  Y.)  492, 

"  2  Stew.  (Ala.)  420  (1830)  ;  3  Port,  (Ala.)  436  (1836)  ;  10  Ala.  579 
(^1846);  37  Ala.  573  (1861);  27  111.  15  (1861);  17  Kas.  514  (1877);  1 
Johns.  Ch.  (N.  Y.)  49  (1814);  3  Johns.  Ch.  (N.  Y.)  395  (1818);  17 
Johns.  (N.  Y.)  436  (1819)  ;  22  Tenn.  63  (1842)  ;  45  Tenu.  497  (1868)  ; 
51  Tenn.  300  (1874). 

'"  6  Md.  218  (1854),  when  a  period  of  seven  years  was  deemed  too 
long  a  time  to  wait. 

=  10  Gray  (Mass.)  37  (1858). 

'  10  Pet.  (U.  S.)  497,  521  (1836);  23  Ala.  537  (1853);  28  Ala.  680 
(1856)  ;  32  Ala.  456  (1858)  ;  38  Ala.  323  (1862)  ;  50  Ala.  587  (1874)  ;  64 
Ala.  527  (1879)  ;  18  Ark.  369  (1857)  ;  32  Ark.  346  (1877)  ;  34  Ark.  628 
(1879)  ;  30  Conn.  149  (1861)  ;  5  Del.  Ch.  180  (1877)  ;  10  Ga.  389  (1851)  ; 
75  Ga.  159  (1885);  37  111.  216  (1865);  42  111.  256  (1866);  75  III.  215 
(1874);  90  111.  245  (1878);  95  111.  11  (1880);  69  Miss.  770  (1892); 
Sax.  (N.  J.)  358  (1831)  ;  2  Beas.  (N.  J.)  CQ  (1860)  ;  5  Johns.  Ch.  (X. 
Y.)  122  (1821)  ;  8  Paige  (N.  Y.)  548  (1841)  ;  7  Hill  (N.  Y.)  391  (1844)  ; 
4  Saudf.  Ch.  (N.  Y.)  312  (1846)  ;  5  Barb.  (N.  Y.)  130  (1849)  ;  13  Barb. 


USURY.  251 

ute  onl}'  allows  the  principal  to  be  recovered  at  law.^  Sev- 
eral courts  hold  that  the  delator  must  make  a  tender  of  the 
principal  and  legal  interest  due,^  and  must  bring  the  money 
into  court  if  it  is  not  accepted.^ 

If  the  debt  is  secured  by  a  mortgage,  the  mortgage  re- 
mains security  for  the  amount  that  equity  decides  to  be 
due.*  In  a  certain  case,  a  borrower  encumbered  his  prop- 
erty to  secure  an  usurious  debt,  then  became  a  bankrupt, 
and  was  afterward  dischara^ed  from  his  debts  under  the 
bankrupt  act.  He  afterward  acquired  title  to  the  same 
property  by  purchase  from  the  assignee  in  bankruptcy,  and 
on  a  bill  filed  by  him  to  have  the  incumbrance  cancelled  on 
account  of  the  usury,  it  was  held  that  he  was  not  entitled 
to  relief  unless  he  paid  the  principal  and  legal  interest.^ 

If  a  borrower  defends,  this  rule  does  not  apply,  and  he 
can  then  have  relief  without  paying  or  ofi'ering  to  pay  what 
is  equitably  due  on  the  dcljt.'^ 

(N.  Y.)  5G1  (1852)  ;  2  Hawks  (N.  C.)  4G5  (1823)  ;  82  N.  C.  134  (1880)  ; 
104  N.  C.  219  (1889);  109  N.  C.  539  (1891);  32  Tenu.  2G5  (1852);  8 
Leigh  (Va.)  93  (1837);  contra,  8G  Miim.  4G0  (1887). 

'  89  111.  123  (1878). 

''  79  Ga.  790  (1887)  ;  3  Gilm.  (111.)  547  (184G)  ;  75  111.  215  (1S74)  ;  89 
111.  123  (1878)  ;  1  Blf.  (Ind.)  382  (1825)  ;  7  Blf.  (Ind.)  337,  423  (1845)  ; 
4  Ind.  539  (1853)  ;  6  G.  &  J.  (Md.)  18  (1833)  ;  1  Md.  Ch.  GG  (1847)  ;  7 
Gill  (Md.)  158  (1848)  ;  8  Gill  (Md.)  1  (1849)  ;  9  Gill  (Md.)  299  (1850)  ; 
24  Neb.  79  (1888)  ;  2  Bcas.  (N.  J.)  G6  (18G0)  ;  ICE.  Gr.  (N.  J.)  4G8 
(18G4),  550  (18G2)  ;  8  C.  E.  Gr.  (N.  J.)  554  (1872) ;  contra,  11  Iowa  419 
(18G0);  12  Iowa  185  (18C1)  ;  46  Iowa  84  (1877).  In  a  New  Jersey 
case,  a  bill  was  filed  against  a  trustee,  but  not  against  the  certid  que 
trust,  and  the  latter  afterward  came  in  as  complainant  setting  up  the 
usury.  Sax.  (N.  J.)  358  (1831).  If  the  bill  does  not  state  that  an  offer 
to  pay  has  been  made,  it  is  demurrable.     2  Beas.  (N.  J.)  6G  (18G0). 

3  1  Blf.  (Ind.)  382  (1825)  ;  7  Blf.  (Ind.)  337,  423  ri845)  ;  4  Ind.  539 
(1853). 

■*23  Ala.  537  (1853). 

*  14  N.  Y.  (4  Kern.)  93  (1856). 

«  5  Johns.  Ch.  (N.  Y.)  122  (1821)  ;  10  O.  St.  200  (18G3)  ;  37  Wis.  364 
(1875;. 


252  THE    LAW    OF    INTEREST. 

The  doctrine  of  equity  that  the  party  complaining  may 
be  relieved  from  excess  only  of  interest  applies  to  the  case 
of  a  claimant  of  priority  of  a  fund,  another  claimant,  de- 
fendant, being  an  alleged  usurer.^ 

The  remedy  against  usury  in  a  trust  deed  is  also  in  cquity.- 

a.  Cancellation.  A  bill  praying  for  cancellation  of 
securities  for  usury  need  not  offer  to  repay  the  principal 
Avith  legal  interest.^  A  mortgage  void  for  usury  cannot 
be  foreclosed;*  but  if  the  mortgagor  seeks  its  cancellation 
he  must  pay  the  valid  debts  secured  by  it.^  A  devisee  of 
the  mortgagor  musttirst  pay,*'  and  so  must  a  surety  for  the 
loan  at  least  tender  the  exact  amount  due,"  if  he  would 
have  the  instrument  cancelled. 

b.  Discovery.  A  discovery  may  be  had  in  equity,* 
and  the  payment  of  the  money  into  court  is  not  a  condi- 
tion to  it.^  A  party  cannot  have  a  discovery  in  equity  to 
aid  his  defence  at  law,^*^  unless  he  is  so  situated  that  he  can- 
not avail  himself  of  the  witness  in  the  suit  at  law.^^ 

c.  Injunction.  Equity  will  enjoin  a  lender  from  en- 
deavoring to  collect  usurious  interest,'^  even  on  a  bond  ^^ 
and  an  execution.^*  It  also  lies  to  restrain  a  sale  and 
transfer  of  the  indebtedness  ;^^  and  a  bill  to  enjoin  a  sale 

1  ITVall.  (U.  S.)  C04  (18G3). 

2  91111.539  (1879). 

'■>  36  Minn.  4C0  (1887). 

*3GMinn.  4G0  (1887). 

*  37  N.  Y.  iU  (1867). 

«13IIim  (N.  Y.)  126  (1878). 

Meilim  (N.  Y.)  311  (1878). 

895111.  11  (1880). 

MOGa.  389  (1851). 
i»3  Lit.  (Ky.)  109  (1823). 

'»  2  Sandf.  Ch.  (N.  Y.)  187  (1843) ;  1  Barb.  Cb.  (N.  Y.)  404  (1846). 
>2  19  Kas.  601  (1878). 
"  1  Grat.  (Va.)  153  (1844). 
'*  4  J.  J.  Mar.  (Ky.)  88  (1830). 

'5  12  S.  &  M.  (Miss.)  631  (1849)  ;  4  Geo.  (Miss.)  299  (1857)  ;  25  Neb. 
484  (1889). 


USURY.  253 

on  account  of  usury  may  be  filed  even  after  the  lender's 
death. 1  Kelief  will  also  be  given  to  a  party  enjoining  a 
sale  under  an  usurious  deed  of  trust.^ 

d.  Reconveyance.  If  the  valid  portion  of  a  note  is  paid, 
it  does  not  then  represent  any  legal  indebtedness,  and  the 
borrower  will  be  entitled  to  a  reconveyance  of  the  security.^ 

e.  Recover!/  of  usury  paid.  A  borrower  may  be  re- 
lieved in  equity,  and  usury  collected  by  law  may  be  recov- 
ered in  equity,^  even  upon  a  judgment,^  says  the  Maryland 
court  of  chancery  ;  but  see  page  295. 

2.  By  lenders.  If  a  lender  seeks  relief  in  equity,  he 
can  recover  only  the  principal ;  ^  as  in  the  case  of  a  bill  for 
the  foreclosure  of  a  mortgage.^  He  must  ofier  to  abate  all 
the  interest.^  And  rests  will  not  be  allowed  to  convert 
interest  into  principal.^ 

Equity  will  not  aid  in  the  recovery  of  a  note  that  is 
void  under  the  usury  statute. ^° 

The  Kentucky  court  will  not  entertain  a  bill  in  favor  of 
a  lender  to  recover  money  lent  on  an  usurious  contract  ;^^ 

>  17  Grat.  (Va.)  21  (1861). 

2  8  Grat.  (Va.)  22  (1851).  Where  a  Avidow,  -who  was  not  her  late 
husband's  personal  representative,  brought  a  bill  to  enjoin  tlie  fore- 
closure of  a  mortgage,  which  included  usurious  interest,  it  was  held 
that  she  could  not  maintain  the  bill  Avithout  showing  that  she  had  an 
estate  in  the  premises.     37  Wis.  364  (1875). 

334  Iowa  483  (1872). 

4  4Mon.  (Ky.)  488  (1827). 

=  1  Md.  Ch.  127  (1847). 

«  22  S.  C.  279  (1884).  And  the  Tennessee  court  holds  that  a  lender 
cannot  sue  on  an  usurious  contract,  if  he  admits  the  usury.  27  Tenn. 
605  (1848). 

7  73  Ala.  Ill  (1882). 

8  11  So.  Rep.  (Ala.)  304  (1892). 

9  38  Ala.  323  (1862)  ;  50  Ala.  587  (1874). 
»»  10  Wheat.  (U.  S.)  367  (1825). 

"4  Bibb   (Ky.)  460  (1816). 


254  THE    LAW    OF    INTEREST. 

and  the  North  Carolina  court,  sittini;  in  equity,  will  never 
assist  a  creditor  who  has  l)ecn  guilty  of  usury. ^  The 
South  Carolina  court  will  not  declare  a  contract  usurious 
and  void  in  favor  of  him  for  whose  gain  the  usury  was 
intended,  in  order  to  restore  to  him  the  rights  he  surren- 
dered in  consideration  of  the  contract. - 

{b)  Ilecovery  of  usury  paid.  Usury  paid  may  be  re- 
covered in  three  ways  :  1.  By  suit;  2.  By  set-oil';  and  3. 
By  forfeiture. 

1.  By  suit.  Usurious  interest  paid  cannot  l)e  recov- 
ered by  an  independent  suit  brought  therefor,  unless  the 
statute  gives  the  right,^  or  such  contracts  are  declared  void 
by  the  statute.*  The  usury  need  not  have  been  paid  in 
pursuance  of  an  usurious  agreement  made  at  tlie  time  the 
contract  was  entered  into,  in  order  to  recover  it.^  In- 
terest paid  on  collateral  security  cannot  be  recovered  f 
though  the  Kentucky  court  holds  that  the  borrower  may 
recover  usury  even  if  it  is  paid  on  a  judgment,  and  may 
recover  it  at  either  law  or  equity,^  the  argument   of  the 

'  2  Dev.  Eq.  (N.  C.)  75  (1831)  ;  1  Dev.  &  Bat.  Eq.  (N.  C.)  50  (1834). 

2  1  Bail.  (S.  C.)  4  (1828). 

MSWaU.  (U.  S.)  375  (1873);  35  111.  40  (1864);  2  La.  428  (1831)  ; 
14  La.  34  (1839)  ;  19  La.  154,  185  (1841)  ;  16  La.  Ann.  217  (18G1)  ;  125 
Mass.  562  (1878)  ;  43  Mo.  App.  300  (1891)  ;  44  Mo.  App.  406  (1891)  ;  2 
N.  II.  333  (1821);  IG  N.  H.  479  (1845)  ;  34  N.  11.82  (1856);  61  N.  H.  157 
(1881)  ;  02  N.  II.  300  (1882)  ;  4G  Barb.  (N.  Y.)  21  (1866)  ;  102  N.  C. 
137  (1889)  ;  11  O.  417  (1842)  ;  G3Pa.  St.  108  (18G9)  ;  20  Vt.  201  (1848)  ; 
35  Vt.  476,  503  (18G3)  ;  contra,  34  Md.  389  (1871)  ;  10  Vr.  (39  N.  J.  L.) 
22  (1876);  76  Va.  419  (1882). 

"  12  Iowa  300  (1861).  The  siipr<?mc  court  of  the  Uuitcd  States,  in 
the  case  cited  18  Wall.  (U.  S.)  375  (1873),  allowed  illegal  interest  paid 
to  be  recovered,  but  stated  that  it  AvasAvithin  the  discretion  of  the 
court  of  equity. 

*23  Vt.  272  (1851). 

«  24  111.  3S1  (1860)  ;  28  111.  519  (1862)  ;  29  111.  184  (1862). 

T  ^o  Ky.  71  (1887). 


USURY.  255 

court  being  that  the  money  was  paid  without  consideration, 
and  that  it  was  extorted  from  the  borrower.^  This  right 
has  no  cast  of  a  penalty  .^ 

The  foregoing  rule  relates  to  voluntary  payments  of 
usury,  which  prevents  usurious  interest  paid  from  being 
recovered  or  set  oflf  in  courts  of  equity,  unless  the  statute 
gives  the  right.^  The  court  in  Virginia,  however,  holds 
that  the  borrower  and  lender  at  usurious  rates  are  not  in  pari 
delicto,  but  that  the  former  acts  under  a  quasi  duress,  and 
the  maxim,  ^^  In  pari  delicto,  potior  est  conditio  defendentis," 
does  not  apply.* 

If  the  payment  is  involuntary  it  can  be  recovered  on 
common  law  principles.^  What  constitutes  a  voluntary 
payment  is  sometimes  difficult  to  determine.  Where  the 
maker  of  a  note  given  for  an  usurious  consideration  de- 
posited with  the  holder  certain  negotiable  paper  as  collat- 
eral security,  which  was  to  be  collected  and  the  proceeds 
applied  to  the  payment  of  the  note,  the  money  collected 
on  such  collateral  is  to  be  regarded  as  voluntarily  paid  on 
the  note  by  the  maker.*^  So  if  it  is  made  by  a  foreclosure 
and  sale  of  mortgaged  property  without  objection.^  The 
Ohio  court  went  so  far  as  to  hold  that  the  payment  of 

'5B.  Mon.  (Ky.)  319  (1815). 

2  63  Pa.  St.  108  (18C9). 

3  24  111.381  (1860);  34  111.  505  (1864);  39  111.  539  (1864);  103  111. 
600  (1882)  ;  14  Bradw.  (111.)  340  (1883)  ;  12  Iowa  300  (1861)  ;  40  Iowa 
304  (1875)  ;  15  La.  378  (1840)  ;  38  Mich.  200  (1878)  ;  5  Minn.  382 
(1861)  ;  22  Minn.  341  (1876)  ;  26  Minn.  547  (1880)  ;  39  Mo.  445  (1867)  ; 
55  Mo.  389  (1874)  ;  58  Hun  (N.  Y.)  575  (1891)  ;  12  0.  153  (1843)  ; 
17  0.  605  (1848);  26  O.  St.  207  (1875);  contra,  1  Kelley  (Ga.)  241 
(1846)  ;  35  Pa.  St.  470  (1860)  ;  14  Tenn.398  (1834)  ;  22  Tenn.  66  (1842)  ; 
43  Tenn.  477  (1866). 

4  4  Barb.  (N.  Y.)  346  (1848) ;  11  Barb.  (N.  Y.)  159  (1850) ;  9  N.  Y. 
(5  Selcl.)  241  (1853)  ;  76  Va.  419  (18823.     See  24  111.  381  (1860). 

5  67Ind.  478  (1879). 

6  39  111.  539(1864). 

7  26  Minn.  547  (1880). 


250  THE    LAW   OF   INTEREST. 

usury  was  voluntary  -when  it  was  exacted  by  the  creditor 
before  delivery  of  certain  securities  belonging  to  the  debtor 
which  he  held.^  The  court  in  Indiana  holds  that  the  maker's 
payment  of  a  judgment  recovered  on  his  note  payable  in 
bank,  by  a  bona  fide  indorsee  for  value  and  before  matur- 
ity, is  not  voluntary,  and  that  the  maker  can  recover  from 
the  payee  the  usurious  interest  so  paid.- 

But  usurious  interest  cannot  be  recovered  before  it  is 
paid.^ 

Xeithcr  law  nor  equity  will  permit  the  recovery  of  more 
than  the  excess  of  usury  paid  ;*  but  that  can  be  sued  for,^ 
even  though  the  contract  has  passed  into  a  judgment,^  when 
it  is  not  included  in  the  judgment.' 

An  accommodation  maker  and  an  accommodation  in- 
dorser  can  recover  only  the  amount  of  usury  actually  paid 
by  them,^  in  Louisiana. 

If  the  recovery  of  usury  paid  is  allowed,  and  the  rem- 
edy is  not  fixed  by  the  statute,  an  action  at  law  will  lie,^ 
as,  for  instance,  an  action  for  debt,^^  and  the  approved 
form  is  assumpsit  on  a  count  for  money  had  and  received. ^^ 
If  the  statute  gives  two  remedies  the  neglect  to  take  ad- 
vantage of  one  is  not  a  bar  to  the  second. ^^ 

'  2G  0.  St.  207  (1875). 

■•2  67  Ind.  478  (1879). 

3  C  Ga.  228  (1849)  ;  79  Ga.  416  (1887)  ;  84  Ga.  452  (1889). 

*0  Gill  (Md.)  299  (1850). 

=  22  Vt.  581  (1849)  ;  51  Vt.  378  (1879). 

653  Vt.  33  (1880). 

'  53  Vt.  33  (1880). 

8  6  Rob.  (La.)  120  (1843). 

9  60  Miss.  349  (1882). 

'°  15  Shcpl.  (Me.)  215  (1848). 

'»7Blf.  (Ind.)  105  (1844);  5  Ind.  308  (1854);  12  Shepl.  (Me.)  33 
(1845);  34Md.  389  (1871);  G  TV.  &  S.  (Pa.)  179  (1843);  63  Pa.  St. 
108  (1869)  ;  23  Vt.  272  (1851)  ;  21  W.  Va.  523  (1883). 

'2  22  Vt.  581  (1849)  ;  51  Vt.  378  (1879)  ;  53  Vt.  33  (1880)  ;  61  Vt.  65 
(1888). 


USURY.  257 

If  usurious  interest  is  paid  on  a  note  after  its  execution, 
it  amounts  to  a  payment  on  the  principal ;  and  if  it  ex- 
ceeds the  amount  of  the  principal,  the  Indiana  court  holds 
that  the  excess  beyond  the  principal  can  be  recovered.^ 

Where  payments  of  usurious  interest  had  more  than 
discharged  the  debt,  and  a  sum  was  due  to  the  defendant, 
he  was  permited  to  file  a  cross  bill  to  recover  the  amount 
due  him,  although  he  might  also  have  recovered  at  law.^ 

If  payments  of  usurious  interest  have  been  made  in  the 
course  of  mutual  dealings  between  the  parties,  and  they 
have  had  no  final  settlement,  the  statute  of  limitations  does 
not  begin  to  run  from  the  dates  of  payment  of  the  usurious 
interest,  but  from  the  time  the  principal  and  legal  inter- 
est is  fully  paid.^ 

Interest  on  usury  paid  runs  from  the  time  the  borrower 
elects  by  demand,    or  suit,  to  reclaim  the  usury.* 

A  contract  founded  upon  usury  paid  is  good  if  it  can 
be  recovered.^ 

If  a  borrower  delivers  property  in  part  payment  of  a 
loan,  he  cannot  recover  it  on  the  ground  of  usury  in  the 
loan.  His  only  remedy  is  an  action  to  recover  the  excess 
of  interest.  But  when  chattels  are  pledged  or  mortgaged 
to  secure  the  payment  of  an  usurious  debt,  the  borrower 
has  an  immediate  right  to  recover  them,*^  if  the  usurious 
contract  is  void. 

2.  By  set-of.  Although  usurious  interest  voluntarily 
paid  cannot  be  recovered  by  an  independent  suit  at  com- 
mon law,  yet  it  can  be  set  ofi'by  plea  against  a  suit  brought 


'  23Ind.  4  (1864). 
'■'  24  Atl.  Rep.  (Vt.)  131  (1892). 
3  54  Ga.  190  (1875). 

*  1  B.  Mon.  (Ky.)  314  (1841) ;  5  B.  Mon.  (Ky.)  93  (1844). 
*21  Vt.  38  (1848). 
«  7  Cow.  (N.  Y.)  290  (1827). 
17 


258  THE    LAW    OF    INTEREST. 

on  the  contract,  if  any  part  of  the  legal  amount  due  re- 
mains unpaid,^  but  not  otherwise.  The  fact  that  the  usury 
was  voluntarily  i)aid,  or  the  statute  of  limitations,  can 
be  pleaded  in  defence  to  such  set-otf.^  It  must  be  usury 
paid  on  the  contract  sued  on.^  It  cannot  l)e  recovered 
after  the  transaction  is  closed  ;^  and  the  contract  must 
still  be  in  the  hands  of  him  who  received  the  usuiy  souixht 
to  be  set  oil",  or  in  the  hands  of  an  assignee  with  notice.^ 
The  New  Hampshire  court  has  recently  decided,  however, 
that  where  the  defendant  has  paid  the  plaintiff  usurious 
interest  on  a  note  which  the  plaintiff  afterward  sold,  it 
may  Ije  set  off  in  an  action  on  another  note.*' 

All  payments  of  usurious  interest  made  may,  at  the 
payor's  option,  be  regarded  as  partial  payments  made  on 
the  principal  and  valid  interest,  and  reckoned  l)y  the  partial 
payment  rule.'    The  rule  is  the  same  in  recoupment. '^ 

No  allowance  for  supposed  over-valuation  of  property 
received  in  payment  of  an  usurious  loan  can  be  made  in 
taking  account  of  usury. ^ 

'  74  Ala.  G04  (1883)  ;  100  III.  611  (1881) ;  19  III.  4G7  (18S7)  ;  39  Ind. 
305  (1872);  70  Iml.  373  (1880);  2  Rob.  (La.)  99  (1842);  22  La.  Ann. 
418  (1870);  30  Neb.  99  (1890);  2  Johns.  Ch.  (N.  Y.)  182  (181G)  ;  17 
O.  605  (1848);  31  O.  St.  142  (1877);  110  Pa.  St.  60  (1885);  24  Tenn. 
406  (1844);  43  Vt.  400  (1871);  55  Vt.  415  (1883);  contra,  55  Mo.  389 
(1874)  ;  58  Hun  (N.  Y.)  575  (1891). 

2  18  Tex.  794  (1857). 

3  46  Ga.  422  (1872)  ;  73  IlL  213  (1874)  ;  97  lU.  568  (1881)  ;  103  III.  600 
(1882)  ;  9  Iowa  376  (1859)  :  53  Iowa  396  (1880) ;  58  Iowa  728  (1882) ; 

24Kas.  679  (1881);  3  N.  H.  185  (1825);  11  N.  H.  66  (1840);  24  Pa. 
St.  215  (1855)  ;  12  R.  I.  344  (1879) ;  43  Vt.  400  (1871). 

*  37  III.  331  (1865)  ;  44  III.  405  (1867). 

*  60  III.  367  (1871). 

«  21  Atl.  Rep.  (N.  11.)  221  (1890). 

^  7  B.  Mod.  (Ky.)  442  (1847) ;  11  Bush  (Ky.)  396  (1875)  ;  33  W.  Ya. 
159  (1889). 
8  75  Ind.  318  (1881). 
»22  Tenn.  666  (1842). 


USURY.  259 

It  is  within  the  election  and  discretion  of  the  paj^or 
whether  he  will  bring  a  separate  suit  for  the  usury  (if  the 
statute  allows  it),  or  ask  to  have  it  applied  to  the  payment 
of  the  principal  when  sued/  or  plead  it  in  part  payment,^ 
or  in  settlement.^ 

Several  courts  hold  that  usurious  interest  paid  cannot 
be  recovered  by  suit  so  long  as  any  part  of  the  amount 
legally  due  remains  unpaid,  because  the  creditor  is  pre- 
sumed to  have  applied  it  to  the  payment  of  the  legal  por- 
tion of  the  debt.*  But  if  a  balance  remains  to  the  debtor's 
credit,  he  can  recover  it  by  suit.^ 

If  it  appears  upon  the  petition  of  the  plaintiff  that  he  is 
seeking  to  recover  usurious  interest,  it  is  held  in  Ken- 
tucky that  it  is  the  duty  of  the  court  to  purge  the  usury 
before  rendering  judgment.'' 

Courts  hold  generally  that  payments  of  usurious  interest 
are  technically  payments  made  on  the  legal  portion  of  the 
debt,"  which  if  the  parties  appear  the  court  will  thus  apply 
without  plea  or  answer.^      Against  such  application  the 

1  28  111.  352  (1862)  ;  35  111.  40,  GG  (1804)  ;  37  111.  831  (18G5)  ;  44  111. 
405  (1867)  ;  77  111.  182,  525  (1875)  ;  97  111.  568  (1881)  ;  103  111.  600 
(1882)  ;  22  Vt.  581  (1849)  ;  35  Vt.  476  (1863)  ;  53  Vt.  539  (1881)  ;  con- 
tra, he  cannot  charge  the  usurious  interest  paid  to  the  payment  of  the 
principal  of  the  debt,  12  R.  I.  344  (1879). 

*  15  Vt.  115  (1843)  ;  19  Vt.  496  (1847)  ;  22  Vt.  581  (1849)  ;  53  Vt. 
202  (1880),  491,  539  (1881)  ;  CO  Vt.  209  (1887). 

3  51  Vt.  378  (1879)  ;  53  Vt.  33  (1880). 

*  15  Vt.  115  (1843)  ;  19  Vt.  496  (1847)  ;  22  Vt.  581  (1849)  ;  53  Vt. 
202  (1880),  491,  539  (1881)  ;  60  Vt.  209  (1887)  ;  80  Va.  379  (1885)  ;  21 
W.  Va.  523  (1883). 

*53  Vt.  202  (1880). 

6  12  AV.  P.  D.  Bush  (Ky.)  298  (1870)  ;  79  Ky.  346  (1881). 

7  1  Kelley  (Ga.)  108  (1846)  ;  35  111.  40  (1864)  ;  77  111.  182  (1875)  ;  86 
111.  197,  513  (1877)  ;  53  Vt,  33  (1880)  ;  61  Vt.  65  (1888)  ;  contra,  98  U. 
S.  555  (1878)  ;  104  U.  S.  52  (1881).  See  34  O.  St.  142  (1877). 

«  29  O.  St.  587  (1876)  ;  53  Vt.  501  (1881)  ;  cotitra,  53  Huu  (N.  Y.)  93 
(1889). 


2G0  THE    LAW   OF   INTEREST. 

statute  of  limitations  is  no  defence.^  If  the  court  has  thus 
appliotl  the  usury  paid,  it  cannot  al'terward  1)0  recovered 
])y  suit.- 

"Wlien  over-due  notes  arc  transferred,  the  usurious  inter- 
est paid  to  the  original  owner  may  be  deducted.^  And  when 
a  new  note  and  a  new  mortsfajje  are  ijiven  for  old  ones,  the 
usury  paid  on  the  first  may  be  deducted  on  the  second,^ 
in  foreclosing.  It  is  the  same  debt  or  loan.  In  defence 
to  a  foreclosure,  it  must  be  shown,  however,  that  the  usu- 
rious excess  was  received  by  the  mortgagee  or  his  agent. ^ 

In  an  action  for  the  principal  debt  the  excess  of  usurious 
interest  can  be  recouped  only  to  the  legal  amount  remain- 
ing due  to  the  lender.^ 

The  Arkansas  court  says  that  where  the  statute  gives 
the  right  of  a  suit  at  law  to  recover  usurious  interest  paid 
that  remedy  is  exclusive,  and  no  such  interest  can  l)e  re- 
couped." 

Payments  made  without  direction  as  to  their  application 
to  the  usurious  or  legal  interest  or  the  principal  are  not 
appropriated,  and  therefore  the  statute  of  limitations  will 
run  against  each  payment  from  its  date,  says  the  Georgia 
court. ^ 

Where  the  purchaser  of  a  mortgage  has  received  a  bonus 
in  excess  of  lawful  interest  paid  l)y  the  l)orrower  for  an 
extension  of  time  of  payment  of  principal,  the  borrower, 
when  sued  in  foreclosure,  is  entitled  to  have  such  excess 
credited  on  the  mortgage,  as  a  payment.^ 

•  5  Dana  (Ky.)  83  (1837). 
»53  Vt.  33  (1880). 

^53  Vt.  501  (1881). 
*o3  Vt.  501  (1881). 

*  1  Stew.  (N.  J.)  345  (1877). 
«57  Iiul.  539  (1877). 

'  47  Ark.  54  (1885).  See  2G  0.  St.  75  (1875). 
"71  Ga.  549  (1883). 
0  70  N.  Y.  03  (1877). 


261 

National  banks  cannot  recoup  usurious  interest  paid  in 
advance,  says  the  Indiana  court. ^ 

3.  By  forfeiture.  When  a  forfeiture  for  usury  is  al- 
lowed by  tlie  statute,  tlie  statute  must  be  followed  in  the 
recovery  of  it.  It  must  be  ascertained  judicially  upon  an 
issue  between  the  parties  before  it  can  bo  applied  to  the 
reduction  of  the  debt  so  as  to  afiect  the  title  ot  the  lender 
to  property  held  by  him  as  collateral  security.- 

To  recover  the  penalty  by  the  statute  against  usury, 
the  plaintiff  need  not  show  that  the  principal  has  been 
paid,^  unless  the  statute  requires  it.  But  if  the  stat- 
ute requires  the  usury  to  have  been  received  before  the 
penalty  is  incurred,  then  of  course  its  receipt  by  the  de- 
fendant must  be  shown.*  A  return  of  judgment  satisfied 
on  an  execution  by  a  sheriff  is  not  sufficient  evidence  of 
receipt  in  such  cases. ^  Neither  is  it  necessary  to  show 
that  usurious  interest  has  been  received,  unless  the  penalty 
lies  only  when  usury  has  been  received. 

Interest  on  a  note,  in  forfeiture,  should  be  computed 
from  the  time  the  money  was  borrowed,  though  several 
successive  notes  have  been  sfiven.'' 

A  forfeiture  to  the  school  fund,  under  the  laws  of  Ore- 
gon, will  carry  the  securities  with  it ;  ^  and  in  Iowa,  where 
the  forfeiture  goes  to  the  school  fund,  the  court  will  decree 
it  in  spite  of  the  parties.^ 

Before  judgment,  the  penalty  allowed  for  taking  or  re- 


'  44  Ind.  298  (1873). 

2  1  Allen  (Mass.)  399  (1861). 

^  2  Murph.  (N.  C.)  200  (1812). 

•*  4  Ired.  L.  (N.  C.)  296  (1844)  ;  6  Ired.  L.  (N.  C.)  390  (1846). 

=  7  Dev.  &  Bat.  (N.  C.)  474  (1837). 

«  14  Iowa  125  (1862). 

^5  Ore.  432  (1875). 

^  17  Iowa  439  (1864) ;  60  Iowa  289  (1882). 


262  THE    LAW    OF   INTEREST. 

ceiving  usurious  interest  by  a  national  bank  does  not  bear 
intercut. ^ 

(c)  Mlio  may  recover^  or  ji^^ad  iisiirt/.  As  the  usury 
law  exists  for  the  protection  of  the  borrower,'^  the  courts 
always  lean  in  his  favor.  A  stranger  cannot  ol)ject  to 
usury  in  a  loan,^  unless  it  is  void  by  statute,^  except  with 
the  debtor's  consent.^  Neither  can  the  lender*^  set  up 
usury  in  the  loan, —  that  right  is  given  only  to  the  bor- 
rower" and  certain  parties  claiming  under  him.  The  lend- 
er can  avoid  his  agreement  on  the  ground  of  usury  in  the 
contract  in  order  to  make  the  contract  legal ,^  but  only  in 
equity,  as  already  detailed. 

The  right  to  recover  usury  is  assignable,^  and  such  an 
assignment  is  contained  in  an  absolute  and  unconditional 
sale  of  all  interest  in  a  judgment  that  might  be  recovered  ;  ^° 

'  20  0.  St.  75  (1875). 

2  45  Ala.  429  (1871)  ;  27  Conn.  142  (1858)  ;  32  Conn.  550  (18G5)  ;  95 
111.  493  (ISSO);  33  Vt.  553  (18G1)  ;  31  Wis.  G73  (1873);  42  Wis.  031 
(1877). 

^8  Wheat.  (U.  S.)  339  (1823);  59  Ala.  172,  419  (1877);  9  Ind.  135 
(1857)  ;  11  Ind.  398  (1858)  ;  15  Ind.  50  (1800)  ;  37  Iowa  325  (1873)  ;  8 
Paige  (X.  Y.)  039  (1841)  ;  78  Va.  100  (1883). 

^  S  Wlieat.  (U.  S.)  339  (1823). 

=  9  Ind.  135  (1857)  ;  11  Ind.  398  (1858) ;  15  Ind.  50  (1800). 

6  30  Ark.  248  (1880);  3  Gilm.  (111.)  547  (1840);  75  Ind.  318  (1881); 
4  Barb.  (X.  Y.)  346  (1848);  11  Barb.  (N.  Y.)  159  (1850);  9  X.  Y. 
(5  Seld.)  241  (1853). 

7  22  Ala.  202  (1853)  ;  45  Ala.  429  (1871) ;  27  Conn.  142  (1858) ;  32 
Conn.  550  (1805);  66  Ga.  398  (1881)^  95  111.  493  (1880);  123  111.510 
(1888);  55  Ind.  341  (1870);  75  Ind.  318  (1881);  14  Iowa  125,  251 
(1802);  32  Iowa  418  (1871);  37  Iowa  325  (1873);  1  Mich.  84  (1848); 
U  Mich.  59  (1802)  ;  38  Mich.  200  (1878);  9  N.  Y.  (5  Seld.)  73  (1853)  ; 
29  Barb.  (N.  Y.)  401  (1859);  33  N.  Y.  31  (1805);  30  N.  Y.  144,  319 
(1807)  ;  37  N.  Y.  218  (1807)  ;  25  Ilun  (N.  Y.)  490  (1881)  ;  33  Vt.  553 
(1801);  ''^  Va.  100  (1883);  21  W.  Va.  108  (1882);  31  W.  Va.  410 
(1888). 

9  15  Iliin  (N.  Y.)  504  (1878)  ;  20  Ilnn  (N.  Y.)  153  (1880). 
»  3  J.  .T.  Mar.  (Ky.)  13  (1829)  ;  49  Tcnn.  454  (1873). 
"'49  Teun.  454  (1873). 


USURY.  263 

but  a  mortgage  of  "  all  my  estate  "  does  not  convey  the  right 
to  sue  for  usury. ^ 

In  a  suit  on  a  note  where  usury  may  be  pleaded  by  the 
consent  of  the  maker,  it  is  not  necessary  that  he  should 
be  a  party  to  the  suit.^ 

When  property  is  mortgaged  to  secure  several  debts, 
some  of  which  are  legal  and  others  usurious,  and  the  pro- 
ceeds of  the  sale  of  the  property  are  insufficient  to  pay  all, 
it  must  be  divided  without  regard  to  the  illegal  interest  if 
the  morto'aii'or  assents.^ 

If  a  borrower  Avaive  the  privilege  of  the  defence  of  the 
usury  law,  no  one  else,  claiming  under  him,  can  take  ad- 
vantage of  it.* 

If  a  party  to  an  usurious  contract  be  made  a  party  to 
an  action  aijainst  his  vendee  to  foreclose  a  mortaaijc  se- 
curing  it,  he  may  set  up  usury  as  a  ground  of  equitable 
relief  to  himself.^ 

Where  an  action  of  replevin  is  brought  by  a  chattel 
mort£:ao;ee  with  o-eneral  averment  of  title,  the  defendant, 
under  a  general  denial,  may  show  usuiy  in  the  mortgage." 

A  plaintiff  in  replevin  suing  as  mortgagee  of  a  renewal 
mortgage,  which  was  proved  on  trial  to  be  usurious,  can- 
not recover  under  the  original  mortgage.^ 

Usury  cannot  be  set  up  as  a  defence  by  one  who  has 
converted  a  note  and  collected  the  full  amount  when  sued 
by  the  true  owner  for  the  amount  so  collected.^ 

W^here  a  debtor  had  no  actual  notice  of  the  suit  (thongh 
the  statutory  subpoena  had  been  served)  she  was  granted  a 

»  3  J.  J.  Mar.  (Ky.)  13  (1829). 
2  19Ind.  110  (1862). 
»  45  Ala.  429  (1871). 
*  3  Ala.  643  (1842). 
*8  1nd.  352  (1856). 

6  45  Minn.  448  (1891). 

7  43  Minn.  270  (1890). 

8  25  Iowa  56  (1868). 


264  THE    LAW    OF    INTEREST. 

motion  to  set  aside  the  execution,  the  property  having 
been  advertised  for  sale,  that  she  might  be  heard  ;^  but 
otherwise,  if  she  had  had  notice  by  publication  and  was 
represented  by  her  trustee. ^ 

A  debtor  of  an  estate  allowed  usurious  interest  on  his 
debt,  and  he  gave  in  payment  therefor  his  notes  to  a  leg- 
atee, who  accepted  them  in  part  payment  of  his  legacy. 
In  an  action  on  the  notes,  the  debtor  could  not  set  up  the 
usury  allowed  the  estate  in  defence,  although  the  legatee 
was  one  of  the  executors  who  made  the  settlement.-' 

A  creditor  is  not  allowed  to  show  that  an  obligation, 
which  he  has  taken  in  satisfaction  of  a  prior  demand,  is 
usurious,  and  therefore  void,  in  order  to  avoid  the  cflect 
of  such  obligation  as  a  satisfaction  of  the  prior  demand. 
The  parties  do  not  stand  inixiri  delicto.  There  is  oppres- 
sion on  one  side,  and  submission  on  the  other.* 

Assignees.  It  is  generally  held  that  assignees  in  insol- 
vency can  take  advantage  of  usury  paid  by  their  insolvents,* 
providing  the  statute  does  not  give  the  exclusive  right  of 
recovery  to  other  persons  or  classes  of  persons. 

If  a  debtor  assigns  for  the  benefit  of  his  creditors,  hav- 
iuf'  previously  mortgaged  his  real  estate,  and  the  assignee, 
at  the  debtor's  special  request,  pays  the  mortgage,  which 
is  usurious,  the  debtor  can  recover  the  usury  thus  paid,  as 
he  furnished  the  funds  with  which  it  was  paid.^ 

A  o-eneral  assisrnment  for  the  benetit  of  creditors  made 

1  12  C.  E.  Gr.  (N.  J.)  35G  (187G). 
^  1  Stew.  (N.  J.)  398  (1877). 
3  24  O.  St.  486  (1874). 

*  9  N.  Y.  (5  Seld.)  241  (1853) ;  4  Barb.  (N.  Y.)  340  (1848)  ;  11  Barb. 
(N.  Y.)  159  (1850). 

*  99  Mass.  G3  (1868)  ;  44  Minn.  218  (1890)  ;  64  N.  Y.  242  (1876)  ;  43 
O.  St.  220  (1885)  ;  96  Pa.  St.  327  (1880) ;  23  Vt.  739  (1848)  ;  cotitra, 
55  Ala.  344  (1876)  ;  22  Vt.  581  (1849)  ;  32  Yt.  93  (1859)  ;  56  Vt.  332 
(1883).. 

•=30  Vt.  183  (18G3).  In  this  case  the  time  in -which  the  assignee 
could  bring  his  action  had  run  out. 


USURY.  265 

by  a  mortgagor  to  his  mortgagee,  naming  the  mortgage  as 
a  valid  lien,  does  not  estop  the  mortgagor  from  setting  up 
usury  against  foreclosure.  Such  an  assignment  is  only 
additional  security.^ 

The  mortgagor  can  plead  usury  paid  to  the  mortgagee  in 
an  action  brought  by  an  assignee  of  the  mortgage.^ 

The  assignee  of  a  judgment  may  repel  the  defendant 
coming  into  equity  for  a  set-off  on  notes  against  the  judg- 
ment, by  alleging  the  usurious  consideration  of  the  notes 
set  up  in  the  bill.^ 

The  assignment  to  a  husband  of  an  usurious  mortgage 
made  by  his  wife,  and  the  giving  a  new  mortgage  by  both 
for  the  same  and  additional  consideration,  does  not  pre- 
clude the  wife  from  interposing  the  defence  of  usury.* 

A  debtor  whose  note,  including  usurious  interest,  has 
been  assigned,  when  sued  in  chancery,  may  bring  in  the 
assignor  by  a  cross-bill,  and  recover  any  usury  that  has 
been  paid  and  which  is  not  barred  by  the  lapse  of  time."^ 

The  obligor  of  a  bond,  or  other  writing  under  seal,  can- 
not take  advantage  of  the  usury  practised  upon  the  as- 
signor by  the  assignee  in  obtaining  the  assignment  of  the 
instrument,*'  nor  reclaim  it.' 

Creditors.  One  creditor  cannot,  during  his  debtor's 
lifetime,  plead  usury  to  defeat  the  claim  of  another  credi- 
or,  in  whole  or  in  part.^ 

A  judgment  creditor  of  the  mortgagor  cannot  take  ad- 

123  Hun  (N.  Y.)  12  (1880). 

2  22  S.  C.  169  (1884). 

3  7  Mon.  (Ky.)  191  (1828). 

4  46  Barb.  (N.  Y.)  272  (1866). 
*  7  B.  Mon.  (Ky.)  276  (1847) 

«  Hardin  (Ky.)  87  (1807) ;  4  Dana  (Ky.)  181  (1836). 
'  4  Dana  (Ky.)  181  (1836). 
«  21  W.  Va.  10  8  (1882). 


266  THE    LAW    OF    INTEREST. 

vantage  of  the  usury  in  the  mortgage.^  He  may  set  up 
usury,  however,  to  avoid  title  and  sul)ject  the  debtor's 
property  to  the  debt.- 

A  creditor  cannot  set  up  usury  in  favor  of  his  debtor  ;^ 
neither  can  lie  recover  it.*  Nor  can  a  judgment  creditor 
of  an  insolvent  debtor  set  up  usury  in  behalf  of  his  debtor 
in  a  proceeding  to  which  he  is  not  a  party. ^ 

A  judgment  creditor  cannot  attack  a  prior  judgment  on 
the  ground  that  it  contains  usurious  interest,  without 
proof  of  an  intent  to  defraud  him  thereby."  And  such 
payment  of  usury  is  not  fraud,  necessarily.^ 

Usury  paid  by  an  insolvent  debtor  to  one  creditor  is 
not  recoverable  by  another  f  the  debtor  must  assert  his 
own  right ;  aliter,  if  not  paid  over,  and  it  remains  in  the 
hands  of  the  trustee  to  be  paid  over.^  So  one  creditor 
cannot  enjoin  another  judgment  creditor  from  enforcing 
an  usurious  contract. ^'^ 

Devisees.  Devisees  cannot  take  advantage  of  usury  in 
their  testator's  contracts. ^^  The  court  in  Kentucky  holds, 
however,  that  a  claim  against  the  testator  may  be  purged 
of  usurious  interest  on  demand  of  any  one  of  the  devisees 
in  an  action  against  them  to  subject  the  estate  to  the  pay- 
ment of  a  debt  of  the  testator. ^- 

'  45  Ala.  582  (1871) ;  31  N.  E.  Rep.  (111.)  503  (1802)  ;  contra,  GS  Tenu. 
104  (1873). 

2  GGGa.  398  (1881). 

3  17  lud.  77  (18G1)  ;  55  Iml.  341  (1S7G). 

*  7  B.  Mon.  (Ky.)  54  (1846)  ;  10  B.  Mou.  (Ky.)  118  (1840). 

*32  Iowa  418  (1871). 

6  93  Pa.  St.  208  (1880). 

■>  03  ra.  St.  301  (1880)  ;  9G  Ba.  St.  4G0  (1880). 

8  37  111.  45  (18G5). 

9  78  Ga.  2G9  (1886). 
'"48Ga.  55  (1873). 

»'  33  N.  Y.  31  (1865). 

12  12  W.  P.  D.  Bush  (Ky.)  401  (1876). 


USURY.  267 

Where  a  residuary  devisee  received  usurious  notes  of 
the  executor,  and  the  debtor  gave  new  notes  to  the  devi- 
see, it  was  held  that  the  debtor  did  not  deprive  himself  ol 
the  right  to  have  the  usury  purged  from  the  demand.^ 

Guarantors.  A  guarantor  can  set  up  usury  in  a  suit 
on  the  guaranty,^  whenever  an  indorser^  can,  says  the 
New  York  court. 

The  defence  of  usury  is  not  available  to  one  who  has 
guaranteed  an  usurious  obligation  of  a  foreign  corporation, 
contracted  in  New  York,  says  the  court  in  that  state,*  the 
statute  prohibiting  corporations  setting  up  the  defence  of 
usury. 

Heirs.  A  borrower's  heirs  can  take  advantage  of  the 
ancestor's  usurious  contracts.^  It  seems  that  when  land 
incumbered  with  an  usurious  mortgage  descends  to  an 
heir,  the  right  of  action  is  in  the  heir  and  not  in  the  ad- 
ministrator of  the  deceased.  So  the  heir  of  the  borrower 
paying  the  lender  usurious  interest,  to  remove  an  incum- 
brance of  a  security  deed  of  the  ancestor,  may  recover  it.^ 

Indorsers.  Indorsers  may  take  advantage  of  the  mak- 
er's usurious  contract  ;^  but  not  if  he  is  sued  by  the  in- 
dorsee,® unless  the  usury  is  in  their  contract.^ 

If  a  banking  corporation  cannot  set  up  usury,  its  in- 
dorser  cannot. ^° 


1  15  B.  Mon.  (Ky.)  466  (1854). 

2  67  Iowa  13  (1885)  ;  20  Me.  (2  AppL,  7  Sliepl.)  28  (1841). 

3  37  Barb.  (N.  Y.)  189  (1862). 
*  63  Barb.  (N.  Y.)  415  (1866). 

s  55  Ind.  341  (1876)  ;  33  N.  Y.  31  (1865). 

6  78  Ga.  635  (1887). 

7  1  Greenl.  (Me.)  167  (1821)  ;  12  Shepl.  (Me.)  33  (1845). 

8  6  Hill  (N.  Y.)  492  (1844). 

9  2  Brev.  (S.  C.)  199  (1807)  ;  contra,  55  Tex.  167  (1881). 

10  60  N.    Y.    612   (1875)  ;   11  Hun  (N.  Y.)   139   (1877)  ;  74  N.  Y.  85 
(1878). 


2G8  THE    LAW    OF    IXTEUEST. 

Accommodation  indorsers.  An  accommodation  intlorser 
may  set  np  usury  in  the  maker's  contract.^ 

An  accommodation  indorser  of  a  note  ^vho  takes  it  up 
at  maturity,  in  ignorance  of  the  fact  that  it  has  been  dis- 
counted at  an  usurious  rate,  may  mainttiin  an  action  against 
the  maker  for  re-iml)ursement.- 

"When  a  note  is  discounted  at  an  usurious  rate  for  the 
payee,  who  then  indorses  it,  the  defence  of  usuiy  is  avail- 
able both  for  maker  and  indorser,  tlie  note  being  accom- 
modation, and  assigned  witli  notice  of  that  fact  ;^  other- 
wise, if  it  is  business  paper. 

An  indorser  of  a  note  is  not  estopped  from  setting  up 
usury,  by  a  certificate  to  the  effect  tliat  tlie  note  is  business 
paper,  given  for  a  full  consideration  and  subject  to  no  de- 
fences, when  its  holder  had  knowledge  that  it  was  indorsed 
for  the  accommodation  of  the  maker,  and  had  its  ince})tion 
when  so  transferred.^ 

Makers.  Where  an  indorsee  buys  a  valid  note  of  the 
payee,  on  an  usurious  consideration,  the  maker  (who  was 
the  party  sued)  has  a  right  to  set  up  such  intermediate 
usury  to  impeach  the  plaintiff's  title  to  sue.^  The  Texas 
court  holds  that  the  rule  is  applicable  only  to  accommo- 
dation paper.*'  See  beyond  under  PurcJiasers  from  mort- 
gagors. 

The  maker  cannot  defend  on  the  ground  that  the  (l('l)t 
for  which  the  note  was  pledged  as  security  was  tainted 
with  usury.^ 

Accommodation  makers.     Accommodation  makers   are 

'  22  Ala.  262  (1853)  ;  2  Met.  (Mass.)  8  (1840). 

2  11  Hun  (N.  Y.)  110  (1877). 

3  55  Tex.  167  (1881). 
*  106  N.  Y.  70  (1887). 

5  2  Conn.  175  (1817). 

6  55  Tex.  167  (1881). 

7  9  Gill  (Md.)  137  (1850). 


USURY.  2G9 

not  "  borrowers,"  and  therefore  cannot  set  up  usury,  where 
the  statute  confers  that  right  upon  borrowers  only.^ 

Oppressed  p)ariies.  Some  courts  hold  to  the  broad 
principle  that  any  oppressed  party  to  a  contract  can  take 
advantage  of  the  usury  in  it.^ 

Partners.  In  an  action  on  a  firm  note,  either  partner 
may  set  up  usury,  without  the  consent  of  the  other,  and  so 
may  a  partner  who  has  undertaken  to  pay  the  firm's  debts, 
in  a  suit  brouo-ht  ao;ainst  him  alone  after  dissolution.  If 
usury  is  set  up  by  either  partner,  the  penalty  should  be 
enforced  against  both.  A  renewal  of  the  partnership  note 
by  one  of  the  partners  will  not  deprive  him  of  the  right 
to  set  up  usury  as  to  such  note.^ 

Payors.  He  who  pays  the  usury  can  recover  it,  gener- 
ally speaking.^ 

Privies.  All  privies  to  the  Ijorrower  can  set  up  usury 
in  defence.^  The  New  York  rule  is  as  follows  :  "All 
privies  to  the  borrower,  whether  in  blood,  representation, 
or  estate,  both  in  law  and  equity,  by  the  appropriate  legal 
and  equitable  remedies  and  defences,  may  attack  or  de- 
fend against  a  contract  or  security  given  by  the  borrower 


>  16  How.  Pr.  (N.  Y.)  142  (1857). 

2  47  Ala.  363  (1872)  ;  7  Conn.  409  (1829)  ;  111  111.  328  (1884)  ;  14  Iowa 
125,  251  (1862)  ;  32  Iowa  418  (1871)  ;  37  Iowa  325  (1873)  ;  8  Shepl. 
(Me.)  195  (1842);  17  Shepl.  (Me.)  118  (1849);  50  Vt.  67  (1877);  51 
Vt.  77  (1878). 

3  15  Iowa  49  (1863). 

^  13  Mass.  104  (1816);  3  Pick.  (Mass.)  184  (1825);  35  N.  H.  421 
(1857)  ;  60  N.  H.  17,  100  (1880)  ;  32  Vt.  89  (1859)  ;  33  Vt.  553  (1861)  ; 
49  Vt.  400  (1877)  ;  50  Vt.  67  (1877)  ;  51  Vt.  77  (1878)  ;  53  Vt.  33  (1880), 
491,  501  (1881). 

5  36  Ark.  248  (1880)  ;  84  Ga.  748  (1890)  ;  22  111.  327  (1859)  ;  123  111. 
510  (1888) ;  14  Iowa  125,  251  (1862) ;  32  Iowa  418  (1871) ;  37  Iowa  325 
(1873)  ;  8  Paige  (N.  Y.)  639  (1841)  ;  49  N.  Y.  635  (1872)  ;  22  Hun  (N.  Y.) 
208,  218  (1880)  ;  25  Hun  (N.  Y.)  490  (1881)  ;  1  Coop.  (Teuu.)  459 
(1873).  See  2  Hill  (N.  Y.)  522  (1842). 


270  THE    LAW    OF    INTEREST. 

which  is  tainted  with  usury,  on  the  ground  of  such  usury, 
when  such  contract  or  security  aftccts  the  estate  derived 
by  them  from  the  borrower."^ 

Purchasers  from  mortgagors.  A  purchaser  of  an  equity 
of  redemption  may  avail  himself  of  the  defence  of  usury 
paid  by  the  mortgagor,^  unless  it  is  purchased  sul)ject  to 
the  mortgage,^  iu  which  case  he  cannot  do  so,  as  he  thus 
affirms  the  mortgage,*  and  waives  the  riglit  of  defence.'^ 
This  is  true  in  equitable  relief,*'  and  in  defence  to  a  writ 
of  entry  on  the  mortgage.'^  The  Illinois  court  holds  that 
the  purchaser  of  property  subject  to  a  mortgage,  can- 
not recover  usury  if  he  was  ignorant  of  its  existence  in  the 
mortgage  at  the  time  of  his  purchase,'^  and  the  Wisconsin 
court  says  that  it  makes  no  difference  whether  he  knew  it 
or  not.^  The  purchaser  must  have  i)aid  full  price  for  the 
land,  and  it  must  have  been  foreclosed  and  the  money 
paid  before  the  purchase.^" 

If  the  purchaser  of  the  equity  agrees  to  pay  the  mort- 
gage as  part  of  the  consideration  of  the  conveyance,  the 
maker  may  upon  the  face  of  the  note  maintain  an  action 

1  22  Ilnn  (N.  Y.)  208,  218  (1880). 

-  8G  111.  513  (1877)  ;  IMd.  Ch.  127  (1817)  ;  20N.II.  100  (1840)  ;  1  Stock. 
(N.  J.)  807  (1852)  ;  4  Halst.  Ch.  (N.  4.)  789  (1852)  ;  contra,  55  lud.  341 
(1876)  ;  13  Mass.  515  (1816)  ;  1  Mich.  84  (1848)  ;  11  Mich.  59  (1862)  ; 
27  Neb.  401  (1889). 

•■'  45  111.  322,  4G2  (18G7)  ;  86  111.  513  (1877)  ;  36  Md.  181  (1872)  ;  10  S. 
&  M.  (Miss.)  89  (1848)  ;  34  Barb.  (N.  Y.)  336  (1861)  ;  36  N.  Y.  144, 
319  (1867) ;  94  N. Y.  221  (1883). 

M5  111.  322(1867). 

'  1  McCart.  (N.  J.)  56  (1861)  ;  9  C.  E.  Gr.  (N.  J.)  120  (1873). 

6  24  Md.  62  (1865)  ;  30  Md.  485  (1869). 

7  86  111.  513  (1877);  20  N.  H.  100  (1849);  4  N.  Y.  (4  Corast.)  225 
(1850) ;  10  Wis.  333  (1860) ;  21  Wis.  239  (1866)  ;  contra,  13  Mass.  515 
(1816). 

8  45  111.  322,  462  (1867). 

»  10  Wis.  333  (1860)  ;  21  Wis.  239  (1866). 
'"58  Ga.  158  (1877). 


USURY.  271 

(if  the  statute  allows  it)  against  the  payee  of  the  note  to 
recover  the  forfeiture/  that  is,  payment  by  the  maker's 
vendee  is  deemed  to  be  payment  by  himself.  This  is 
specially  true  if  the  purchaser  agrees  to  pay  the  mortgage 
except  the  usurious  interest ;-  but  he  cannot  set  it  up  in  an 
action  to  foreclose  f  and  the  Minnesota  court  holds  that 
he  is  estopped  from  setting  up  usury  in  any  case.* 

In  Maine,  the  rule  that  the  party  giving  an  usurious 
security  is  entitled,  at  some  time,  to  avoid  it  by  showing 
the  usury,  receives  a  very  broad  construction.-^  A  mort- 
gagor was  allowed  to  do  so  there,  even  after  the  equity  of 
redemption  had  been  sold  at  sheriff's  sale,  and  the  pur- 
chaser had  taken  an  assii2:nment  of  the  mortii'ao-e,  the  time 
for  redemption  having  elapsed,*'  it  being  set  up  against  a 
writ  of  entry,  the  mortgagor  i-emaiiiing  in  possession.  But 
in  a  case  where  the  title  was  absolutely  vested  by  deed  of 
bargain  and  sale  it  was  not  allowed  to  be  disturbed  by 
showing  usury  in  the  consideration." 

If  the  purchaser  of  an  equity  of  redemption  assumes 
and  agrees  to  pay  the  mortgage  he  cannot  set  up  usury  in 
it,  on  the  principle  that  a  person  contracting  to  [)ay  the 
debt  of  another,  and  receiving  })roperty  out  of  which  it 
is  to  l)e  paid,  cannot  oppose  the  plea  of  usury,  or  go  into 
the  consideration  of  the  debt,  and  retain  the  means  placed 
in  his  hands  to  pay  it. ^     The  New  York  court  holds,  how- 


1  7  Gray  (Mass.)  559  (1856). 

2  62  111.  461  (1872). 

3  10  Iowa  385,  491  (1860) ;  13  Iowa  174  (1862)  ;  15  Iowa  470  (1863) ; 
32  Iowa  354  (1871)  ;  38  Iowa  112  (1874)  ;  55  Iowa  424  (1880). 

^36  Minn.  57  (1886). 

*  6  Greenl.  (Me.)  35  (1829)  ;  5  Hubb.  (Me.)  312  (1860). 
6  6  Greenl.  (Me.)  35  (1829). 
">  7  Greenl.  (Me.)  435  (1831). 

8  11  South.  Eep.  (Ala.)  830  (1892)  ;  19  La.   154  (1841)  ;   71  Md.  456 
(1889);  27  Wis.  414  (1870). 


97-> 


THE   LAW    OF   INTEREST. 


ever,  tliat  a  grantee  of  mortgaged  land,  where  the  deed 
warrants  against  the  mortgage,  is  not  estopped  from  set- 
ting np  usury  in  the  mortgage,  even  when  he  retains  part 
of  the  purchase  money  to  pay  it,  and  the  mortgagor  has 
failed  to  set  aside  the  bond,  which  it  secured,  for  usury  in 
the  mortiragc.^ 

The  purchaser  of  an  equity  of  redemption  at  an  execu- 
tion sale  may  set  up  usury  in  the  mortgage,^  if  it  is  sold 
subject  to  the  mortgage,''  unless  the  purchaser  is  a  judg- 
ment creditor.* 

Where  a  mortgagor  releases  for  the  sole  purpose  of 
creating  a  tiust  in  favor  of  himself,  the  releasee  cannot 
set  up  usury,  having  no  personal  interest  in  the  premises/ 

A  mortgage  maybe  assailed  for  usury,  says  the  Minne- 
sota court,  bv  a  sheriff  who  holds  the  mortgagor's  interest 
under  an  attachment.*^ 

Representatives.  A  l)orrower's  personal  representatives 
may  generally  take  advantage  of  usury  in  his  contracts.^ 

If  an  executor  gis'es  his  own  note  for  usury  claimed 
against  his  testator,  the  Kentucky  court  holds  that  he  may 
sue  as  executor  for  its  reclamation.^ 

Second  mortgagees.  A  second  mortgagee  cannot  de- 
fend against  usury  in  the  first  mortgage,^  unless  the  owner 

*  40  Barb.  (N.  Y.)  359  (1863). 

2  1  Stock.  (N.  J.)  8D7  (1852)  ;  4  Halst.  Ch.  (N.:J.)  789  (1852). 

3  2  Halst.  Ch.  (N.  J.)  73  (184G) ;  1  Stock.  (N.  J.)  807  (1852)  ;  10  C. 
E.  Gr.  (N.  J.)  188  (1874). 

*  1  Stock.  (N.  J.)  807  (1852) ;  contra,  2  Halst.  (N.  J.)  73  (184G). 

*  11  C.  E.  Gr.  (N.  J.)  357  (1875). 
«44  Minn.  218  (1890). 

'  3  Ala.  458  (1842)  ;  55  Ala.  344  (187G)  ;  72  Ala.  294  (1882)  ;  55  Ind. 
341  (1876)  ;  75  Ind.  318  (1881)  ;  29  Barb.  (N.  Y.)  401  (1859)  ;  33  N.  Y. 
31  (1865). 

«  12  B.  Mon.  (Ky.)  89  (1851). 

»  123  111.  510  (1888)  ;  17  Kas.  355  (1876)  ;  26  Hun  (N.  Y.)  209  (1882)  ; 
46  Wis.  692  (1879);  contra,  26  Conn.  241  (1857);  26  Ind.  94  (1866); 
1  Stock.  (N.  J.)  807  (1852)  ;  4  Halst.  Ch.  (N.  J.)  789  (1852). 


USURY.  273 

of  tlie  equity  consents/  or  all  the  parties  are  in  court.^ 
A  junior  mortgagee,  in  an  action  to  redeem  from  the  judg- 
ment in  a  foreclosure  proceeding  to  which  he  was  not 
made  a  party,  and  in  which  usury  was  not  pleaded,  can- 
not set  up  the  defence  of  usury  and  compel  the  holder  of 
the  judgment  to  accept  less  than  the  amount  of  his  lien.^ 

A  purchaser  of  real  property  under  a  foreclosure  sale 
of  a  valid  mortgage  may  set  up  usury  against  a  prior 
mortijage  given  by  the  same  mortgagor,  and  which  is  an 
apparent  lien,^  says  the  New  York  court,  which  applies 
the  same  rule  to  a  purchaser  at  a  sale  in  foreclosure  of  a 
mechanics'  lien.^ 

One  who  holds  a  mortgage  upon  real  estate  subject  to 
the  lien  of  a  prior  judgment,  is  not  a  "borrower,"  and 
therefore  cannot  maintain  a  bill  to  set  aside  the  judgment, 
on  the  ground  that  it  was  confessed  for  an  usurious  debt, 
without  offering  to  pay  the  sum  equitably  due.*^ 

Sureties.  A  surety  on  a  note  can  set  up  usury ,^  even 
though  the  maker  will  not  join  with  him,^  if  the  contract 
is  usurious  in  itself.^  And  the  rule  is  the  same  if  the  note 
is  in  renewal  of  another  on  which  the  interest  was  paid.^'^ 


'ICE.  Gr.  (N.J.)  550  (1862). 

2  2  C.  E.  Gr,  (N.  J.)  87  (1864),  547  (1866). 

3  11  Iowa  430  (1860). 

"22  Hun  (N.  Y.)  208,  218  (1880). 

5  3  Hun  (N.  Y.)  577  (1875). 

6  3  Barb.  Ch.  (N.  Y.)  640  (1847)  ;  2  N.  Y.  (2  Comst.)  131  (1848)  ;  14 
N.  Y.  (4  Kern.)  93  (1856). 

7  22  Ala.  262  (1853)  ;  22  111.  327  (1859)  ;  89  111.  123  (1878)  ;  75  lod. 
318  (1881)  ;  47  Iowa  62  (1877)  ;  67  Iowa  13  (1885)  ;  3  Dana  (Ky.)  595 
(1835)  ;  12  B.  Men.  (Ky.)  307  (1851). 

8  22  111.327  (1859). 

9  44  N.  H.  227  (1862)  ;  32  Vt.  89  (1859) ;  contra,  if  the  usury  has  been 
paid  by  the  principal,  50  Vt.  105  (1877). 

1"  39  Ind.  106  (1872). 
18 


274  THE    LAW   OF    INTEREST. 

Wives.  A  "wife  may  set  up  usury  in  her  husband's  note 
in  an  action  to  foreclose  a  mortgage  of  his  homestead.^ 

(d)  Who  is  liable  to  return  usury  paid.  To  charge  one 
with  usury,  he  must  know  of  and  be  a  party  to  the  intent 
to  violate  the  usury  law  ;  as  where  a  note  and  mortgage 
were  l)oughtof  the  payee,  who  was  the  mortgagee,  believ- 
ing him  to  be  the  owner,  though  he  was  in  fact  merely 
acting  for  the  mortgagor.^ 

AVhocver  receives  usurious  interest  is  liable  to  pay  it 
back  ;  as  an  executor,^  and  also  an  administrator  who  has 
exacted  usury  on  debts  due  his  intestate,  he  being  held 
personally  liable  to  refund,  even  though  he  has  settled  the 
estate,  and  accounted  for  it  to  those  entitled  to  the  estate.* 
So,  in  order  to  constitute  usury  a  defence  on  the  foreclosure 
of  a  mortgage,  it  must  be  shown  that  the  usurious  excess 
was  received  by  the  mortgagee  or  his  agent. ^ 

A  claim  for  usury  paid  survives  against  the  estate  of  the 
person  to  whom  it  was  paid.*^ 

The  assignee  of  a  mortgage,  even  without  notice  of  the 
usury,  takes  it  subject  to  the  defence  of  usury  ;^  and  a  sale 
under  the  power  in  an  usurious  mortgage  puts  the  pur- 
chaser in  the  same  plight  as  the  original  mortgagee.^  A 
purchaser  from  the  mortgagor  may  set  up  the  defence  of 
usury  to  defeat  the  action  of  the  assignee  of  the  mort- 
irairee.^ 

Where  the  payee  of  a  note  transfers  the  same  before 

'  20  Iowa  578  (18GG). 

242  Minn.  438  (1890). 

=»8B.  IMon.  (Ky.)452  (1848). 

*  5  B.  Mod.  (Ky.)  145  (1844). 

"  1  SteAV.  (N.  J.)  345  (1877). 

«  8  B.  Mon.  (Ky.)  452  (1848)  ;  27  Vt.  39G  (1855). 

^8  C.  E.  Gr.  (N.  J.)  174  (1872). 

"31  Minn.  495  (1884). 

M  Md.  Cli.  127  (1847). 


USURY.  275 

maturity  to  a  bona  fide  purchaser  so  that  the  maker  is 
compelled  to  pay  the  usury,  he  can  recover  the  usury  from 
the  payee,  if  the  payment  of  the  usury  is  the  motive  for 
cloino"  it.^ 

The  New  Jersey  court  holds  that  if  a  contract  between 
an  indorser  and  his  indorsee  is  usurious,  the  latter  can 
maintain  no  action  against  the  maker  or  any  prior  party 
to  the  instrument,  although  it  was  good  in  its  creation.^ 

An  accommodation  indorser  of  a  note  who  takes  it  up  at 
maturity,  in  ignorance  of  the  fact  that  it  has  been  dis- 
counted at  an  usurious  rate,  may  maintain  an  action  against 
the  maker  for  reimbursement.^ 

A  principal  is  presumed  to  know  the  manner  in  which 
his  general  agent  transacts  his  business,  and  is  chargeable 
with  usury  if  he  authorizes  or  sanctions  the  taking  by  his 
agent  of  such  usury,  even  for  the  agent's  own  benefit,*  says 
the  Minnesota  court ;  but  see  page  240. 

(e)  Pleading  and  practice.  The  following  rules  and 
principles  apply  to  the  general  usury  practice  in  the  courts. 

1.  Pleading.  Usury  may  be  set  up  by  plea,  or  relied 
upon  in  answer.^  The  general  rule  is,  that  when  usury  is 
pleaded  in  defence  it  must  be  done  specifically,  and  in  detail, 
setting  out  all  the  facts  necessary  to  sustain  the  claim,*' 

1  27  111.  301  (1862)  ;  40  111.  131  (1865). 

2  2Harr.  (N.  J.)  191  (1839). 

3  II  Hun  (N.  Y.)  119  (1877). 
''46Miuii.  360  (1891). 

5  2  Mel.  Ch.  510  (1849). 

6  61  Ala.  492  (1878)  ;  81  Ala.  464  (1886)  ;  85  Ala.  368  (1888)  ;  Kirby 
(Conn.)  143  (1786);  26  Conn.  2U  (1857);  1  Kelley  (Ga.)  108  (1846); 
55  Ga.  412  (1875),  G91  (1876)  ;  G5  Ga.  386  (1880)  ;  68  Ga.  628  (1882)  ; 
69  Ga.  722  (1882);  24  111.  381  (1860);  37  111.  253  (1865);  40  111.519 
(1866) ;  83  111  519  (1876)  ;  86  111.  197  (1877)  ;  6  Blf.  (Ind.)  133  (1842). 
378  (1843)  ;  16  Ind.  189  (ISCl)  ;  6  Men.  (Ky.)  81  (1827)  ;  7  Men.  (Ky.) 
53,  2C3  (1828)  ;  1  J.  J.  Mar.  (Ky.)  10  (1828)  ;  2  Duv.  (Ky.)  153,  154 
(1865) ;  9  Gray  (Mass.)  64  (1857) ;  53  N.  W.  Rt-p-  (Miiin.)  647  (1892) ; 


276  THE    LAW   OF   INTEREST. 

unless  the  contract  sued  on,  whicli  is  included  in  the 
phiintiirs  pleadings,  shows  the  usury  on  its  face.^  This 
is  true  at  both  law  and  equity .^  But  unusual  strictness  is 
not  required  in  pleading  in  usury .^  The  plea  must  also 
show  the  amount  of  illegal  interest  paid.*  But  in  every 
case  it  must  conform  to  the  statutory  requirements.^ 
Some  courts  hold  that  if  the  contract  set  out  in  tiie  plead- 
ings of  the  plaintiff  is  usurious  on  its  face  its  usurious 
nature  need  not  be  pleaded,*'  or  proved,^  and  the  court  of 
its  own  motion  will  purge  the  usury .^  The  court  will  not 
extend  the  time  for  answering  in  usury.''  The  statute 
nuist  be  pleaded  specially  ;^*'  usury  cannot  be  shown  under 
the  general  issue  ;^^  though  it  may  be  under  the  plea  of 

16  Neb.  GS9  (1884)  ;  50  N.  W.  Rep.  (Neb.)  271  (1891)  ;  3  Harr.  (N.  J.) 
258  (1841);  1  McCart.  (N.  J.)  32G  (18C2)  ;  1  C.  E.  Gr.  (N.J.)  445 
(18G3)  ;  7  C.  E.  Gr.  (N.  J.)  438  (1871),  GOG  (1872)  ;  9  C.  E.  Gr.  (N.  J.) 
125,  135,  230,  312  (1S73)  ;  10  C.  E.  Gr.  (N.  J.)  418  (1874)  ;"  11  C.  E.  Gr. 
(N.J.)  357  (1875);  12  C.  E.  Gr.  (N.  J.)  360  (1S7G),  484  (1875)  ;  2  StCAV. 
(N.  J.)  551  (1878)  ;  5  Stew.  (N.  J.)  456  (1880)  ;  3  Ore.  389  (1872)  ;  50 
Tenn.  242  (1873)  ;  8  Leigh  (Va.)  330  (1837). 

i  2  J.  J.  Mar.  (Ky.)  428  (1829)  ;  80  Va.  379  (1885). 

^  "Where  a  bill  in  equity  showed  the  usury,  the  respondeut  might 
demur.     1  G.  Gr.  (Iowa)  121  (1818) ;  3  W.  Va.  86  (1868). 

^29  Ind.  158  (18G7). 

*  13  Ind.  448  (1859). 

=  63  Ga.  373  (1879). 

6  56  Ga.  210  (1876)  ;  12  W.  P.  D.  Bush  (Ky.)  298  (1876) ;  79  Ky.  346 
(1881). 

'  9  Pet.  (U.  S.)  378,  418  (1835). 

«  12  W.  P.  D.  Bush  (Ky.)  298  (1876)  ;  79  Ky.  346  (1881). 

»2Beas.  (N.  J.)  43  (1860). 

'"  19  Wall.  (U.  S.)  548  (1873) ;  65  Ala.  133  (1880)  ;  70  Ala.  406  (1881)  ; 
2  Conn.  IGI  (1817)  ;  19  111.  132  (1857)  ;  2  Md.  Ch.  510  (1849)  ;  70  Md. 
42  (1888)  ;  109  N.  C.  539  (1.891).     See  48  Md.  455  (1877). 

"  65  Ala.  133  (1880) ;  70  Ala.  406  (1881)  ;  7  Ark.  146  (1846)  ;  17  Ark. 
138  (1856);  22  Ark.  409  (1860);  26  Ark.  356  (1870);  contra,  3  Day 
(Conn.)  68  (1808);  1  McM.  (S.  C.)  225  (1841).  The  Connecticut 
court,  however,  holds  that  it  may  be  shown  under  the  general  issue, 
even  Avithout  notice.    4  Conn.  436  (1822). 


USURY.  277 

non-assumpsit,  say  the  courts  of  South  Carolina  and  West 
Virginia.^  Usury  may  be  shown  if  it  is  not  pleaded,  if 
the  plaintiff  puts  in  evidence  showing  that  it  was  stipulated 
for.'-^ 

If  the  usury  paid  equals  or  exceeds  the  debt  lawfully 
due,  a  plea  in  bar  of  the  action  may  be  made  ;^  but  if  it 
does  not  amount  to  as  much,  a  plea  should  be  made  only 
for  a  deduction  from  the  sum  due.*  A  plea  that  the  con- 
sideration is  entirely  usurious,  if  the  facts  shown  do  not 
prove  it,  is  not  good.^ 

A  plea  in  set-off  must  state  that  the  money  was  paid  as 
usury. *^ 

A  note  with  illegal  interest  may  be  declared  on  as  a 
note  without  interest.^ 

An  agreement  to  withdraw  a  plea  of  usury  is  against 
public  policy.^ 

In  trover,  a  bill  of  sale,  or  other  contract,  can  be  at- 
tacked on  the  ground  of  usury,  without  pleading  it.^ 

A  contract  made  in  another  state,  bearing  upon  its  foce 
a  rate  of  interest  illegal  at  i\\Q  forum,  will  not  be  declared 
void,  without  a  plea  of  usury .^'^  If  the  law  of  another 
state  is  necessary  to  be  proven  to  sustain  the  allegation  of 
usury,  it  must  be  pleaded  and  proved  as  a  fact  in  all  its 

>  3  Brev.  (S.  C.)  54  (1812)  ;  5  W.  Va.  540  (1872) ;  contra,  not  good 
■without  notice,  66  Tenn.  618  (1873).  Notice  maybe  waived,  66  Tenn. 
618  (1873). 

2  7  La.  198  (1834). 

3  4  Hous.  (Del.)  473  (1873)  ;  17  Ind.  521,  528  (1861)  ;  39  Ind.  305 
(1872);  3N.  H.  185  (1825). 

4  17  Ind.  521,  528  (1861)  ;  9  N.  H.  531  (1838)  ;  36  N.  H.  73  (1858). 

5  23  Ind.  119  (1864). 
«  23  Ind.  119  (1864). 
7  1  Ind.  32  (1848). 
si4Kas.  398(1875). 

9  81  Ga.  81  (1888)  ;  50  Micli.  320  (1883)  ;  contra,  71  Ala.  271  (1882). 
"  36  Minn.  333  (1887). 


278  THE   LAW   OF   INTEREST. 

necessary  details  as  far  as  it  affects  the  case.^  The  New 
York  court  holds  that  the  law  of  u  foreign  state  is  pre- 
sumptively the  same  as  that  of  the/o)'?(?n.'-  See,  however, 
;i  full  discussion  of  this  rule  under  "Conflict  of  laws," 
chapter  nine. 

A  loual  contract  cannot  be  made  usurious  by  the  prayer 
of  the  phiintift'  for  usurious  interest,  when  he  seeks  to  en- 
force it.^ 

The  plaintiff  must  fully  negative  the  defcndajit's  plea  of 
usury  in  his  answer  to  it.*  An  evasive  answer  may  be 
deemed  an  admission  of  usury  .^  If  only  a  general  denial 
of  the  usury  is  given,  but  slight  evidence  will  l)e  required 
to  establish  it.^ 

The  plea  of  usury  must  be  verified  b}-  affidavit  if  the 
statute  requires  it. 

Usury  is  a  legal  defence,"  and,  although,  says  the  New 
York  court,  it  is  not  encouraged,®  it  should  be  regarded 
as  any  other  legal  defence,  and  not  be  treated  with  disfa- 
vor, as  being  unconscientious.^ 

A  plea  of  usury  will  be  received  in  equity  at  any  time 
before  the  final  decree. ^'^ 

When  a  bill  is  entered   for  the   foreclosure  of  a  mort- 

>  1  Halst.  Ch.  (N.  J.)  17  (1845);  1  McCart.  (N.  J.)  5G  (18G1),  229, 
355  (1862)  ;  2  McCart.  (N.  J.)  476  (1863) ;  1  C.  E.  Gr.  (N.  J.)  42 
(1863)  ;  12  C.  E.  Gr.  (N.  J.)  360  (1876)  ;  17  Grat.  (Va.)  47  (1861)  ;  4 
W.  Va.  4  (1870);   23  Wis.  383  (1868). 

2  29  Barb.  (N.  Y.)  325  (1859). 

3 10  La.  Ann.  610  (1855). 

*  49  Md.  516  (1878). 

*  Lit.  Sel.  Cas.  (Ky.)  378  (1821). 

«  Lit.   Sel.  Cas     Ky.)  484  (1821) ;  7  Mon.  (Ivy.)  383  (1828)  ;  4  J.  J. 
Mar.  (Ky.)  90   (1830) ;  5  Dana  (Ky.)  85  (1837). 
7  9  Cow.  (N.  Y.)  65  (1828). 

«  3  Wend.  (N.  Y.)  573  (1829)  ;  1  Paige  (X.  Y.)  429  (1829). 
9  3  Johns.  Cas.  (N.  Y.)  206  (1802)  ;  4  Denio  (N.  Y.)  264  (1847). 
iHMuuf.  (Va.)  66  (1813). 


USURY.  279 

f^a^'c,  the   mortirnoior  mav  set  up  usury  in  defence,  and 
need  not  file  a  cross-bill.^ 

It  is  not  necessary  generally  to  show  a  corrupt  intent 
to  evade  the  statute. 

The  debtor  must  distinctly  raise  the  defence  of  usury, 
l)ut  not  necessarily  by  plea  or  answer,  it  may  be  by  writ- 
ten exception  to  the  report  of  commissioners  f  but  a  mere 
request  to  have  it  done  is  insufficient.^  So,  in  a  bill  seek- 
ino'  relief  on  the  ground  of  usury,  the  usury  must  be  put 
directly  in  issue.* 

Where  a  written  contract  on  its  face  purports  to  be 
usurious,  allegations  and  proof  that  the  contract  was  not 
usurious,  must  be  explicit  and  clear  of  all  doubt. ^ 

It  is  not  error  to  reject  pleas  that  set  forth  specifically 
the  manner  by  which  a  contract  is  alleged  to  have  been 
executed  usuriously,  when  a  plea  is  also  filed  alleging 
usury,  under  the  statute,  by  which  any  defence  can  be 
made  that  could  have  been  made  if  the  pleas  had  not  been 
rejected.® 

In  an  action  of  debt  for  a  statutory  penalty,  a  prom- 
issory note  taken  being  the  only  legal  evidence  of  the 
contract  of  loan,  it  should  be  declared  on  accordingly.^ 

The  law  will  not  apply  a  general  payment,  nor  au- 
thorize the  creditor  to  apply  it,  without  the  consent  of 
the  debtor,  to  the  payment  of  usury. ^  If  the  debtor 
neglects  to  apply  it,  the  creditor  may  do  so.^  When 
payments  have  been  made,  which  are  merely  credited  on 

'  2  C.  E.  Gr.  (N.  J.)  87  (18G4),  547  (1866). 

231  W.  Va.  410  (1888). 

331  W.  Va.  410  (1888). 

^5  Rand.  (Va.)  543  (1827). 

570.  St.  387  (1857). 

65  W.  Va.  540  (1872). 

^4  Pa.  St.  317  (1846). 

s  16  Tex.  200  (1856). 

^80  Va.  379  (1885). 


280  THE    LAW    OF    INTKUEST. 

the  l)ond,  and  not  applied  specially,  the  borrower  is 
entitled  to  have  such  payments  deducted  from  the  princi- 
})al  sum  loaned  on  forfeiture.^ 

A  defendant  may  plead  usmy  in  the  original  contract 
to  a  scire  facias  brought  to  revive  a  decree  obtained  by 
default,  says  the  Virginia  court. ^ 

2.  Proof.  Usury  must  be  clearly  proved  ^  by  evidence 
of  a  satisfactory  character  ;*  it  will  never  be  presumed,^ 
as  it  is  a  violation  of  the  law.  If  the  instrument  sued  on 
shows  the  usury,  its  production  is  sufBcient  proof  of  it.*^ 
If  intent  is  necessary  to  constitute  the  usury  it  must  be 
proved  :"  the  law  will,  however,  infer  a  corrupt  agreement 
if  the  parties  entered  into  it  knowingly.®  If  the  evidence, 
or  contract,  is  capable  of  two  constructions,  by  fairness 
and  reason,  the  court  will  lean  in  tavor  of  that  which 
makes  it  legal  and  valid. ^ 

The  court  in  Kentucky  holds  that  taking  interest  by  a 
separate  note  stamps  the  contract  as  usurious. ^° 

The  Illinois  court  says  that  the  taking  of  usurious 
interest  is  prima  facie  evidence  that  the  contract  was 
oriirinally  usurious." 

'  80  Va.  379  (1885). 
-4H.  .^M.  (Va.)  50-1  (1810). 

•<  53  IIuu  (N.  Y.)  G3  (1889)  ;  8  Leigh  (Va.)  330  (1837). 
MG  Huu   (N.   y.)   209   (1878);  80   N.   Y.   198   (1880);  81  N.  Y.  352 
(1880). 

*  S8  111.  5G6  (1878) ;  53  N.  W.  Rep.  (lo-^va)  12-t  (1892)  ;  5  La.  Ann. 
G82  (1850)  ;  2  Doug.  (Mich.)  230  (184G)  ;  39  Minn.  339  (1888)  ;  53  Ilun 
(N.  Y.)  G3  (1889);  85  Tenn.  127  (188G)  ;  1  Wash.  (Va.)  3G8  (1794); 
21  Wis.  320  (18G7). 

«0  Rand.  (Va.)  6G1  (1828). 

'  52  X.  W.  Rep.  (Minn.)  135  (1892). 

*  2  Harr.  (N.  J.)  487  (1840)  ;  2  Beas.  (N.  J.)  351,  357  (18G1). 

"5  La.  Ann.  G82  (1850);  3  Gr.  Ch.  (N.  J.)  128  (1S37));  2  Beas. 
(N.  J.)  253  (ISGl);  10  C.  E.  Gr.  (N.  J.)  491  (1875);  2  Dick.  (N.  J.) 
8  (1890)  ;  GG  N.  Y.   214  (187G). 

'"  1  J.  J.  Mar.  (Ky.)  49  (1829). 

"  77111.182  (1875). 


USURY.  281 

A  defendant,  who  has  pleaded  usury,  cannot  take  out  a 
commission  to  have  himself  examined.^ 

A  variation  between  a  note  and  a  mortgage  given  to  se- 
cure it,  aflbrds  no  evidence  that  the  difference  is  usury, 
when  the  sum  secured  by  the  mortgage  is  greater  than 
that  named  in  the  consideration  with  accruing  interest.^ 

It  cannot  be  shown  that  the  plaintiff  has  previously  been 
guilty  of  usury. ^ 

It  is  sufficient  if  the  usury  proved  be  substantially  the 
same  as  that  averred  in  the  pleadings  ;*  but  it  will  not 
avail  the  defendant  that  the  case  proved  makes  out  usury, 
if  it  is  not  the  case  set  out  by  the  answer.^ 

If  an  answer  denies  the  allegation  of  usury,  and  there 
is  no  proof  of  it,  the  bill  will  of  course  bo  dismissed.^ 
Where  a  bill,  brought  to  set  aside  a  judgment  on  the 
ground  of  usury,  simply  says  that  the  debt  is  usurious, 
without  stating  the  usurious  interest  taken,  and  the  charge 
of  usury  is  not  sustained  by  competent  evidence,  the  court 
will  not,  after  long  delay,  set  aside  the  judgment  and 
grant  a  new  trial.^ 

Oral  evidence.  Oral  evidence  is  admissible  to  show 
usury  in  written  contracts.^  A  bill  of  sale^  or  an  abso- 
lute dced^*^  may  thus  be  shown  to  be  a  mortgage.    Evidence 

»  4  McC.  (S.  C.)  254  (1827). 

2  16  N.  H.  479  (1845). 

3  76N.  C.  314  (1877). 
•»  6  0.  St.  19  (1856). 

*  1  McCart.  (N.  J.)  326  (1862)  ;  9  C.  E.  Gr.  (N.  J.)  124  (1873). 
"gOrat.  (Va.)  294  (1852). 
"^  75  Va.  475  (1881). 

8  97  U.  S.  13  (1877)  ;  11  Ark.  16  (1850)  ;  25  Ark.  191  (1868)  ;  47  Ark. 
287(1886);  6  Mon.  (Ky.)  155  (1827);  7  Mou.  (Ky.)  252  (1828);  43 
Minn.  307  (1890)  ;  12  S.  &  M.  (Miss.)  334  (1849)  ;  31  Neb.  328  (1891)  ; 
8  W.  &S.  (Pa.)  31  (1844). 

9  7  Mon.  (Ky.)  252  (1828). 

1"  39  Iowa  549  (1874)  ;  7  Dana  (Ky.)  300  (1838). 


282  THE    LAW    OF    INTEREST. 

ofany  facts  establishing  the  purpose  and  intent  of  the  loan 
is  achnissil)lc.^ 

It  ni.iy  also  ))e  shown  orally  that  a  mistake  was  made 
in  a  written  instrument,  and  that  although  it  is  written 
for  an  usurious  rate  of  interest  it  was  not  so  intended. - 

The  usury  law  is  very  broad  and  will  search  deeply 
into  contracts.^*  The  particulars  of  a  dissolved  partnership 
transaction  can  be  entered  into,  if  it  is  necessary  in  order 
to  expose  usury,  even  though  it  was  dissolved  before  the 
note  was  given.*  A  contract  for  the  sale  and  purchase  of 
property  is  scrutinized  sharply  as  it  is  often  a  device  to 
cover  usury.''  Where  a  note  did  not  stipulate  for  usuri- 
ous interest,  an  oral  promise  to  pay  usury  is  not  admissi- 
ble, although  it  was  afterward  reduced  to  writing.^ 

Burden  of  proof  .  The  burden  of  proving  the  usury  is 
on  the  party  alleging  it.^ 

Quanlity  of  evidence.  Usury,  like  other  civil  actions, 
must  1)0  proved  by  a  fair  preponderance  of  evidence.^ 
The  weight  of  the  evidence  should  not  be  disregarded.^ 

Character  of  proof .     Usury  must  be  proved  clearly  by 

>25  0.  St.  420(1874). 

*  3  Gr.  (N.  J.)  2.55,  258  (1836). 
3  6  Mon.  (Ky.)  554  (1828). 

•»22  Ga.  193  (1857). 

*  1  Mar.  (Ky.)  530  (1817)  :  4  Lit.  (Ky.)  302  (1823)  ;  7  IMon.  (Ky.) 
423  (1828). 

«83  Ala.  323  (1887). 

'  21  S.  W.  Rep.  (Ark.)  432  (1893)  ;  57  lo^va  350  (1881) ;  59  Iowa 
723  (1882)  ;  20  Kas.  285  (1878)  ;  11  Neb.  487  (1881)  ;  1  Gr.  Ch.  (  N.J.) 
453  (1841);  2  C.  E.  Gr.  (N.  J.)  4G0  (18G4)  ;  3  C.  E.  Gr.  (N.  J.)  481 
(18G7)  ;  5  C.  E.  Gr.  (N.  J.)  139  (1869)  ;  7  C.  E.  Gr.  (N.  J.)  438  (1871), 
COG  (1872)  ;  2  Dick.  (N.  J.)  8  (1890)  ;  66  N.  Y.  544  (187G)  ;  81  N.  Y. 
363  (1880);  36  0.  St.  361  (1880);  G  Grat.  (Va.)  287  (1S49);  21  Wis. 
320  (18G7). 

9  73  111.  213  (1874) ;  37  Miun.  441  (1837)  ;  2  Stew.  (N.  J.)  380  (1878)  ; 
2  Dick.  (N.  J.)  8  (1890). 

9  52  N.  W.  Rep.  (Minu.)  135  (1892)  ;  10  C.  E.  Gr.  (N.  J.)  188  (1874). 


USURY. 


283 


cogent  evidence.^  So  in  proving  the  usury  laws  of  an- 
other state. ^ 

Costs.  When  the  lender  refuses  a  tender  of  the  princi- 
pal and  legal  interest,  before  the  action  is  brought,  he 
must  pay  the  costs. ^ 

Miscellany.  In  a  suit  on  two  drafts,  where  the  de- 
fence was  usury,  and  the  verdict  was  for  a  sum  less  than 
the  amount  due,  it  was  held  by  the  Maine  court  that  such 
verdict  established  the  fact  of  usury.* 

The  mere  fact  that  a  debtor  has  paid  usurious  interest 
for  several  years  annually  does  not  support  the  allega- 
tion, under  a  statute  calling  for  a  contract.^  Neither  is  it 
evidence  having  any  legitimate  tendency  to  show  the  in- 
clusion of  usury  in  notes  subsequently  given  for  the  debt.^ 

Evidence  of  a  usage  with  other  banks  organized  under 
the  same  law,  to  discount  more  than  the  legal  rate  of 
interest  upon  the  acquisition  of  business  paper,  is  not 
admissible.^ 

A  note  given  for  an  usurious  consideration  is  illegal  and 
not  evidence  of  a  lawful  contract.^  But  where  usury  is 
pleaded  to  a  suit  on  a  note,  deeds  of  even  date  with  the 
note  and  executed  to  vest  the  title  in  the  lender  as  secur- 
ity for  the  loan,  are  admissible  as  evidence  for  the  plain- 
tiff to  show  the  intention  of  the  parties  as  to  the  real  situs 

1  4  Halst.  Ch.  (N.  J.)  789  (1852)  ;  1  McCart.  (N.  J.)  229  (1862)  ;  1 
r.  E.  Gr.  (N.  J.)  537  (18G3)  ;  2  C.  E.  Gr.  (N.  J.)  4G0  (18G4)  ;  7  C.  E. 
Gr.  (N.  J.)  438  (1871),  606  (1872);  9  C.  E.  Gr.  (N.  J.)  124  (1873); 
10  C.  E.  Gr.  (N.  J.)  418  (1874)  ;  12  C.  E.  Gr.  (N.  J.)  484  (1875)  ;  13 
Stew.  (N.  J.)  281  (1885). 

2  5  C.  E.  Gr.  (N.  J.)  288  (1869). 
^5  Moil.  (Ky.)  92  (1827). 

^  20  Me.  (2  Appl.,  7  Shepl.)  144  (1841). 

^  36  0.  St.  361  (1880). 

6  26  Atl.  Eep.  (Vt.)  67  (1892). 

'  15  0.  St.  68  (1864). 

»3Brev.  (S.  C.)  54  (1812). 


234  THE    LAW   OF   INTEREST. 

of  the  contract,  and  what  state  or  country  they  had  refer- 
ence to  in  tixing-  the  rate  of  interest.^  So  an  usurious  bond 
is  admissible  in  evidence  to  show  the  amount  of  money 
advanced.^ 

The  indorsee  of  a  note,  originally  usurious,  cannot  re- 
cover from  the  maker  on  it,  though  it  is  in  his  hands  for 
value  in  the  way  of  trade.  Such  indorsee  may,  however, 
recover  of  the  indorser  if  he  sues  on  a  count  for  money 
had  and  received.^ 

3.  Recovery  of  security.  If  the  valid  portion  of  a 
note  is  paid,  it  does  not  then  represent  any  legal  indebt- 
edness ;  and  the  borrower  will  be  entitled  to  a  reconvey- 
ance of  the  property  securing  the  loan. "^ 

A  privy  in  estate  may  recover  property  pledged  under 
an  usurious  contract.'' 

If  a  borrower  delivers  property  in  part  payment  of  a 
loan  he  cannot  recover  it  on  the  ground  of  usury  in  the 
loan.  The  only  remedy  is  an  action  to  recover  the  ex- 
cess of  interest.  But  where  chattels  are  pledged  or  mort- 
gaged simply  to  secure  payment  of  an  usurious  debt,  the 
borrower  has  a  right  to  recover  them.° 

The  right  to  have  collateral  security  cancelled  or  re- 
strained in  equity  will  not  be  recognized  without  the 
payment  of  the  principal  sum ;  and  in  such  a  case  an 
assignee  must  show  that  the  principal  has  been  paid.' 

4.  Lmv  andjact.  "Whether  a  certain  contract  is  usu- 
rious or  not  is  a  mixed  question  of  law  and  fact.^     The 

'  15  S.  E.  Rep.  (Ga.)  812  (1892). 

Ml  Leigh  (Va.)  113  (1840). 

3  2  Bay  (S.  C.)  23  (179G). 

*  34  Iowa  483  (1872). 

»49N.  Y.  035  (1872). 

«  7  Cow.  (N.  Y.)  290  (1827). 

'C4N.  Y.  242  (1S7G). 

8  17  Grat.  (Va.)  21  (18GG). 


USURY.  285 

jury  must  determine  upon  the  evidence  what  the  fiicts  are,^ 
and  the  court  decide  whether  or  not  such  facts  bring  the 
contract  within  the  usury  law.^  As  is  the  common  prac- 
tice the  jury  are  to  be  instructed  in  the  law  of  the  case 
by  the  court  and  then  asked  to  determine  whether  or  not 
the  facts  which  they  find  bring  the  contract  within  the 
laAv.^ 

The  question  of  the  consideration  of  forbearance  is  one 
of  fact  for  the  jury.^  So  is  the  question  of  corrupt 
intent.^ 

If  it  is  a  written  contract,  and  the  instrument  is  the 
only  evidence  offered,  then  it  is  entirely  for  the  court. '^ 
If  a  note  is  usurious  on  its  face  and  no  other  evidence  is 
offered,  the  court  may  render  judgment  for  the  principal 
and  legal  interest.^ 

The  law  of  a  foreign  state,  where  a  bill  was  discounted, 
etc.,  must  be  proved  to  establish  usury.® 

5.  Who  may  be  witnesses.  At  common  law  parties 
to  suits  cannot  testify  as  they  are  interested  in  the  event  of 
the  action,  but  the  usury  statutes  generally  give  them  the 
right  to  give  evidence  as  to  the  usury  in  the  contract,  and 
they  can  testify,  not  only  to  the  particular  transaction 
involved  in  the  suit,  but  to  all  transactions  that  have  or 
have  had  any  connection  with  the  usurious  contract,^ 
or  its  consideration.^"     The  endowment  of  certain  parties 

122  Tex.  120  (1858). 

2  2  Rich.  (S.  C.)  73  (1845). 

3  7  Johns.  (N.  Y.)  196  (1810). 

*  12  Wall.  (U.  S.)  226  (1870)  ;  93  U.  S.  344  (187G)  ;  oFIa.  504  (1854)  ; 
77  III.  182  (1875)  ;  3  Met.  (Mass.)  211  (1841). 
5  13  Ired.  L.  (N.  C.)  454  (1852). 

«  3  Cranch  (U.  S.)  180  (1805) ;  3  How.  (U.  S.)  G2  (1845). 
^20  lud.  2C2  (1863). 

8  78  Ga.  229  (1886)  ;  3  Daua  (Ky.)  497  (1835). 

»  8  Ala.  53  (1845)  ;  25  Ala.  433  (1854)  ;  1  McArt.  (D.  C.)  232   (1873). 
'«  18  111.  101  (1856). 


286  THE    LAW    OF    INTEREST. 

uith  this  privilege  of  testifying  does  not  exclude  those 
that  had  such  right  at  common  law.^ 

Borrowers  may  testify  that  interest  is  included  in  the 
note  -without  producing  it.^ 

It  is  held  under  the  usury  statute,  generally,  that  the 
privilcixe  of  testifying  to  usury  in  a  contract  is  given  only 
to  that  class  of  parties  who  allege  it  f  that  is,  -where  one 
of  two  defendants  is  defaulted,  the  defaulted  one  cannot 
testify  to  the  usury.  "Where  money  is  borrowed  by  two 
persons  for  the  benefit  of  one,  and  a  joint  note  is  given, 
on  -u-hich  both  are  sued,  both  arc  competent  witnesses  to 
prove  the  usury  in  the  note.^  But  a  borrower  cannot  give 
evidence  of  a  distinct  and  independent  fact,  and  then 
prove  the  usury  by  other  witnesses  f  that  is,  he  must  tes- 
tify to  the  fact  of  the  offence,  as  that  is  the  only  evidence 
he  can  give  under  the  statute. 

When  there  are  two  defendants,  one  of  them  cannot  be 
compelled  against  his  will  to  be  examined  as  a  witness.*^ 

Neither  the  indorser  of  a  security,"  the  drawer  of  a 
bill,^  nor  a  defendant's  administrator,  although  the  estate 
is  insolvent,"  are  competent  witnesses,  where  the  statute 
makes  certain  parties  witnesses  to  prove  usury. 

The  Massachusetts  court  held  that  the  maker  was  not  a 
competent  witness  where  a  note  was  made  and  discounted 
for  his  benefit  at  an  usurious  rate  of  interest,  and  tlins 
first  placed  in  circulation,  the  action  ])eing  against  the  in- 

»  4  McC.  (S.  C.)  307  (1827)  ;  1  Bail.  (S.  C.)  83  (1828)  ;  45  Teiiu.  5CS 
(1SG8). 

2  lOGMass.  34  (1870). 

3  13  Ala.  121  (1848)  ;  2  Heath  (Me.)  190  (1853). 
■•25  Ala.  433  (1854). 

"  13  Ala.  121  (1848). 

«4  Ala.  IGO  (1842). 

'  4  Mass.  15G  (1808). 

»  1  Root  (Conn.)  120  (1780),  2G7  (1701). 

»  IG  Mass.  118  (1819). 


USURY.  257 

dorser  ;^  but  if  the  suit  is  against  the  maker  of  an  accom- 
modation note,  the  party  accommodated  is  a  competent 
"witness  to  prove  that  he  negotiated  it  upon  an  usurious 
consideration  in  another  state,  whose  laws  render  usurious 
contracts  void,  to  a  party  from  whom  the  pLiintiff  took  it 
after  maturity.^ 

In  a  suit  between  the  assignee  and  obligor  of  a  bond, 
the  obligee  is  not  a  competent  witness  to  prove  usury. ^ 

In  an  action  by  or  against  the  representative  of  a  dece- 
dent on  a  contract  made  between  the  adverse  party  and 
another  who  had  assigned  it  to  the  decedent,  such  adverse 
party  is  a  competent  witness  on  his  own  account  to  ^n'ovc 
the  contract  usurious.* 

Generally,  any  disinterested  person  may  testify  to  the 
usur}'  in  the  contract ;  that  is,  any  one  who  is  not  inter- 
ested in  the  result  of  the  action.  As,  in  an  action  between 
creditors,  the  debtor  is  a  competent  witness.^  In  an  action 
on  a  note  against  an  indorser,  the  maker  is  a  competent 
witness  for  the  defendant.^  An  indorser  of  a  note  is  a 
competent  witness  to  prove  usury  in  the  inception  of  the 
note  in  a  suit  against  the  maker.'^  A  surety  is  a  compe- 
tent witness,^  when  the  suit  is  brought  by  an  indorsee 
against  the  maker.  The  maker  of  a  note  made  for  the 
accommodation  of  the  payee  is  competent  to  prove  usury 
in  it,  if  he  is  released  by  the  payee,  who  is  the  defendant 
in   the  suit.''     In  an  action    by  an  indorsee  against  the 

'  17  Mass.  94  (1821). 

2  10  Gray  (Mass.)  349  (1858). 

3  9  Grat.  (Va.)  294  (1852). 
"45  Minn.  1   (1890). 

"  1  McC.  Ch.  (S.  C.)  434  (1826). 

«  2  lions.  (Del.)  499  (1862)  ;  4  lions.  (Del.)  473  (1873).  ■ 

'  2  G.  Gr.  (Iowa)  217  (1849). 

8  16  Mass.  118  (1819)  ;  2  Rich.  (S.  C.)  1  (1845). 

9  12  Pick.  (Mass.)  565  (1832)  ;  10  Tenn.  1  (1820),  35  (1821)  ;  40  Tenu. 
389,  392  (1859)  ;  45  Tenu.  568  (1868). 


2SS  THE    LAW    OF    INTEREST. 

drawer,  the  indorser  is  a  competent  witness  to  prove 
usury. ^  And  in  an  action  on  a  bill,  Ijotli  drawer  and  in- 
dorser are  conii)etent  witnesses  to  show  usury  to  which 
the  holder  Mas  a  party ,^  the  suit  being  against  the  drawee. 

A  l)roker  negotiating  business  between  the  borrower 
and  lender  is  a  coni})etent  witness  to  prove  the  usurious 
nature  ot  the  transaction.^ 

A^'llore  a  subsequent  judgment-creditor  is  made  a  party 
and  dctends  against  a  mortgage,  on  the  ground  that  it  is 
tainted  with  usury,  the  mortgagor,  who  has  confessed  the 
l)ill,  is  held  to  be  a  competent  Avitness  for  the  creditor  by 
the  court  in  Xew  York.* 

The  princijial  of  a  bond  is  not  a  competent  witness  for 
the  surety  to  prove  that  tlic  l)()nd  is  usurious,  or  that  he 
has  made  payments  thereon.^ 

One  of  two  partners,  who  made  an  usurious  contract 
without  the  knowledge  of  the  other,  is  a  competent  wit- 
ness for  liis  co-partner,  when  sued  upon  a  contract  he  has 
individually  made  with  the  creditor,  in  which  the  usurious 
contract  is  merged,  the  partner  avIio  is  sued  having  released 
the  other.^ 

"When  a  purchaser  of  an  equity  of  redemption  can  have 
relief  in  equity  for  usury  in  the  mortgage,  the  mortgagor 
may  testify,^  if  he  has  sold  his  entire  interest  in  the  prop- 
erty. 

(/)  Defences  (o  claim  for  usury .  There  arc  several 
defences  that  may  be  set  up  against  claims  for  usury. 

1.     Bona  fide  holder.      The  fact  that  the  plaintilf   is 

'  3McC.  (S.  C.)  71  (1825). 

*  103  Mass.  318  (1809), 

3  2  Bay  (S.  C.)  23  (ITOO). 
•'  8  Pai-c  (N.  Y.)  C39  (1841). 

*  1  Rich.  Eq.  (S.  C.)  41  (1844). 
«  13  Ala.  121  (1848). 

'  24  Md.  02  (1805). 


USURY.  289 

a  hona  fide  holder  of  negotiable  paper  for  value  1)cfore 
maturity^  is  generally  a  good  defence  to  a  plea  of  usury  ,-^ 
even  though  it  was  purchased  at  a  discount,'^  and  that  it 
was  accommodation  paper  in  its  inception  ;^  if  the  statute 
is  a  penal  one,  adds  the  New  Hampshire  court.^  The 
Arkansas  court  holds  that  an  act  of  the  legislature  to  make 
usurious  notes  in  the  hands  of  bona  fide  holders  for  value 
valid  is  unconstitutional  and  void.^ 

But  an  assignment  of  an  usurious  debt  to  a  third  person 
will  not  shield  it  from  usury .^  Neither  will  the  transfer 
of  a  note  from  an  old  to  a  new  firm,  which  is  essentially 
the  same,  have  any  effect  on  its  usurious  character.^ 

If  the  holder  knew  of  the  usury  at  the  time  of  the 
transfer,  the  plea  of  usury  is  good  ;  otherwise  not.^  And 
this  is  true  even  though  the  maker  assured  the  holder  be- 
fore the  transfer  that  he  had  no  defence  against  it,  if  he 
actually  knew  that  it  contained  usury. ^"^     Taking  a  note 

'20  Kas.  G55  (1878);  3  J.  J.  Mar.  (Ky.)  13  (1829);  0  Neb.  221 
(1879)  ;  10  Neb.  83  (1880)  ;  14  Neb.  415  (1883)  ;  18  Neb.  545  (18SG)  ;  20 
Neb.  128  (1886)  ;  2  McC.  (S.  C)  178  (1822)  ;  contra,  4  Iowa  490  (1857). 
See  17Iowa43G  (18G4). 

2  64  Ala.  250  (1879)  ;  24  111.  346  (1860)  ;  4  Iowa  490  (1857)  ;  31  Iowa 
444  (1871)  ;  122  Mass.  67  (1877)  ;  52  N.  W.  Rep.  (Neb.)  693  (1892)  ;  7 
C.  E.  Gr.  (N.  J.)  GOG  (1872)  ;  23  Tenn.  244  (1843)  ;  58  Tenn.  340  (1871)  ; 
60  Tex.  679  (1884)  ;  cojitra,  70  Ala.  406  (1881)  ;  41  Ark.  331  (1883)  ;  31 
111.  188  (1863)  ;  10  Tenn.  255  (1829),  350  (1831)  ;  23  Tenn.  24G  (1843). 
See  17  Iowa  436  (18G4). 

^  24  111.  346  (1860)  ;  58  Tenn.  340  (1871). 

•"  31  Iowa  444  (1871)  ;  7  C.  E.  Gr.  (N.  J.)  60G  (1872)  ;  contra,  70  Ala. 
406  (1S81). 

*  2  N.  H.  410  (1821)  ;  3  N.  H.  119  (1824).  But  the  plaintift"  must  not 
demur. 

6  41  Ark.  331  (1883). 

7  3  Johns.  Ch.  (N.  Y.)  395  (1818)  ;  17  Johns.  (N.  Y.)  43G  (1819). 
«  17  Iowa  436  (1864). 

»8  Ark.  157  (1847). 
>o  10  S.  &  M.  (Miss.)  89  (1848). 
19 


290  THE    LAW    OF    INTEREST. 

from  nn  aijent  of  the  indorscr  and  maker  is  not  evidence 
of  notice.^ 

If  a  note  was  originally  valid,  no  intermediate  usurious 
transaction  will  allect  it  in  the  hands  of  a  subsecjuent  fair 
holder  not  privy  to  the  usuiy.-  And  any  note,  afier  hav- 
ing passed  through  the  hands  of  a  bonajide  holder,  against 
Avhoni  no  charge  of  usury  cotdd  be  sustained,  can  l)e  used 
as  though  it  were  originally  valid. ^ 

If  such  a  holder  receives  a  new  note  in  the  })laco  of  the 
usurious  one,  on  terms  which  are  valid,  the  new  instru- 
ment cannot  be  impeached  for  usury  in  the  original  one.* 

Equity  will  not  relieve  the  borrower  against  a  bona  fide 
assiirnee  of  an  usurious  bond,  who  was  induced  to  take 
the  assignment  upon  the  promise  of  the  borrower  to  pay 
it ;  but  it  will  afford  him  relief  against  the  lender.^ 

The  South  Carolina  court  holds  that  when  a  person  in- 
nocent of  usury  indorses  a  note  as  an  accommodation,  and 
the  note  is  then  usuriously  discounted,  the  indorsement  is 
void.^  An  earlier  case  was  decided  by  the  same  court,  in 
which  it  was  held  that  the  plaintiffs,  who  were  indorsees 
without  notice,  had  not  sufEcient  reason  to  repel  a  charge 
of  usury, ^  when  the  contract  was  originally  usurious. 

The  maker  of  a  note,  not  governed  by  the  law  mer- 
chant, cannot  sell  it  for  a  sum  less  than  its  face,  so  as  to 
l)reclude  himself  from  setting  up  want  of  consideration  to 
the  extent  of  the  discount,  except  possibly  in  the  case  of 
estoppel,  where  the  sale  is  by  an  agent. ^ 

'SSTenn.  340  (1871). 
-'  1  Bay  (S.  C.)  486  (1795). 
=*  9  Neb.  454  (1880). 

■»  7  Wend.  (N.  Y.)  25G  (1831)  ;  1  Barb.  Ch.  (X.  Y.)  43  (1845). 
*4  Bibb  (Ky.)  40  (1815);  7  J.  J.  Mar.  (Ky.)   17G  (1832);  9    Daua 
(Ky.)  593  (1810). 
«2  McC.  (S.  C.)  178  (1822). 
'  3  Brev.  (S.  C.)  54  (1812). 
«23  Ind.  4  (18C4). 


USURY.  291 

A  purchaser  in  good  faith  and  for  Vcaliie  at  a  sale  by 
power  of  attorney  in  a  mortgage,  cannot  he  defeated  in 
his  title  by  usury  in  the  original  debt.^ 

In  Virginia,  it  was  held  in  slavery  days  that  a  sale  of 
slaves  under  an  usurious  deed  of  trust  could  not  be 
disturbed.^ 

A  bona  fide  holder  does  not  lose  the  benefit  of  a  se- 
curity because  he  retained  usurious  interest  in  the  con- 
tract it  secures,^  as  the  usury  only  affects  the  interest  in 
W\e  forum. 

The  title  of  an  innocent  purchaser  of  land  at  a  judicial 
sale  under  an  usurious  mortgage  is  not  affected  by  the 
usury  .^ 

A  transfer  before  maturity,  however,  upon  an  usurious 
consitleration,  though  in  the  usual  course  of  business  and 
without  notice,  Avill  not  make  the  indorsee  a  bona  fide 
holder.^  It  is  subject  to  equities.  If  the  note  was  usu- 
rious in  its  origin  only,  he  is  a  bona  fide  holder,  unless  it 
is  a  transaction  to  evade  the  statute. °  Where  a  note  is 
wrongfully  signed  by  a  partner  in  the  firm's  name,  the 
fact  of  purchasing  it  from  a  broker,  to  whom  he  entrusted 
it  for  sale,  does  not  afiord  a  conclusive  presumption  that 
the  purchaser  does  not  take  it  in  good  faith  against  the 
other  members  of  the  firm.^ 

He  who  claims  to  be  a  bona  fide  holder  of  an  usurious 
note  has  the  burden  of  proof  upon  him.^ 

1  10  Johns.  (N.  y.)  185  (1813)  ;  4  Cow.  (N.  Y.)  2GG  (1825). 

2  1  Leigh  (Va.)  147  (1829). 

3  100  U.  S.  239  (1879). 
*5Del.  Ch.  302  (1880). 
^  73  Ala.  558  (1883). 

6  IG  Ala.  398  (1848)  ;  73  Ala.  558  (1883). 
'  G  Alien  (Mass.)  313  (18C3). 

8  9  Neb.  221  (1879)  ;  24  Neb.  G30  (1888)  ;  25  Neb.  380  (1889)  ;  52  N. 
W.  Rep.  (Neb.)  G93  (1892). 


292  THE    LAW    OF    INTEREST. 

Accommodation  joajier.  The  first  real  holder  of  nego- 
tiable paper  cannot  recover  upon  it  if  it  is  made  to  raise 
money  on  and  is  purchased  at  an  usurious  discount,^  be- 
cause it  is  deemed  to  be  a  loan  made  by  liini ;'-  but  he 
must  know  of  the  purpose  of  the  papcr,^  or  that  it  was 
(.ri'^inally  tainted  with  usury. **  It  makes  no  dillerencc 
whether  the  suit  is  brought  against  the  indorseror  maker,^ 
if  he  had  notice.^  Such  holder  for  value  may  sell  it  for 
any  price,'  but  no  prior  holder  can.^  And  such  a  holder 
is  one  who  can  maintain  an  action  on  the  note  against  the 
maker  when  it  is  due.'*  But  subsequent  holders  for  value 
and  without  notice  can  buy  and  sell  for  any  price,  and  it 
is  not  usurious.^''     It  is  then  the  same  as  business  paper." 

'  22  N.  Y.  (8  Smith)  312  (1860)  ;  44  Barb.  (N.  Y.)  87  (1865)  ;  7  Ilun 
(N.  Y.)  570  (187G)  ;  9  Ilun  (N.  Y.)  2G3  (1876)  ;  10  Ilim  CN.  Y.)  307 
(1878)  ;  72  N.  Y.  108  (1878)  ;  111  N.  Y.  441  (1SS8)  ;  4  Jones  L.  (X.  C.) 
399  (1857);  2  Bail.  (S.  C.)  59  (1830);  23  Tenn.  374  (1843);  cmtra, 
11  N.  Y.  (1  Kern.)  368  (1854);  10  How.  Pr.  (N.  Y.)  315  (1854). 
The  indorsee  must  not  know  of  the  existence  of  the  nsur}'.  5  Rand. 
(Va.)  333  (1827)  ;  76  Va.  419  (1882)  ;  77  Va.  492  (1883). 

-  122  N.  Y.  385  (1890). 

=>  10  B.  Mon.  (Ky.)  12  (1849);  55  Tex.  107  (1881);  Gil.  (Va.)  42 
(1820);  5  Rand.  (Va.)  333  (1827);  76  Va.  419  (1882);  77  Va.  492 
(1883)  ;  14  Wis.  571  (1861)  ;  28  Wis.  198  (1871). 

*  1  Stew.  (Ala.)  255  (1827)  ;  3  Ala.  158  (1841)  ;  16  Ala.  398  (1S49) ; 
5  Ilubb.  (Me.)  312  (1860)  ;  5  Allen  (Mass.)  134  (1862)  ;  7  Allen  (Mass  ) 
407  (1803)  ;  10  Paige  (N.  Y.)  326  (1843)  ;  2  Denio  (N.  Y.)  621  (1840)  ; 
4  Duer  (N.  Y.)  408  (1855)  ;  contra,  31  Iowa  444  (1871)  ;  3  Mon.  (Ky.) 
289  (1820). 

">  2  Johns.  Cas.  (N.  Y.)  GO  (1800). 

«  55  Tex.  107  (1881). 

'  15  Johns.  (N.  Y.)  44  (1818)  ;  8  Cow.  (N.  Y.)  009  (1826)  ;  7  Wcnil. 
(N.  Y.)  256,  569  (1831). 

»  8  Cow.  (N.  Y.)  669  (1826). 

»  15  Johns.  (N.  Y.)  44  (1818)  ;  8  Cow.  (N.  Y.)  669  (1826)  ;  7  Wend. 
(N.  Y.)  256,  569  (1831);  2  Denio  (N.  Y.)  621  (1846);  17  How.  Pr. 
(N.  Y.)  566  (1859)  ;  29  Barb.  (N.  Y.)  576  (1859)  ;  9  Ilun  (N.  Y.)  263 
(1876);  72N.  Y.  108  (1878). 

'»  130  N.  Y.  6  (1891)  ;  26  Pa.  St.  259  (1856). 

i>  CO.  St.  37  (1856). 


USURY.  293 

Where  the  holder  cand  apparent  owner  of  negotiable  se- 
curities sells  them  at  a  discount  to  a  bona  fide  purchaser, 
who  supposes  them  to  be  business  paper,  it  is  not  usurious 
to  the  maker, ^  but  is  to  the  seller.  If  it  is  accommodation 
paper,  the  maker  could  defend  against  the  first  indorsee.^ 

A  note  endorsed  for  the  accommodation  of  the  maker 
and  passed  by  him  as  a  security  for  an  usurious  loan,  is 
an  usurious  contract  in  its  inception,  and  the  lender  is  the 
first  holder.^ 

A  party  who  transfers  a  note  upon  a  sufficient  consid- 
eration by  delivery,  knowing  it  to  be  usurious,  to  one 
who  is  ignorant  of  the  defect,  can  be  compelled  to  repay 
the  usury  he  has  received  ;  and  the  cause  of  action  is 
complete  at  the  moment  the  fraudulent  contract  is  con- 
summated.* Usury  still  attaches  to  it,  unless  the  holder 
received  it  through  the  fraud  of  the  maker. ^ 

Taking  a  note  bearing  unpaid  instalments  of  interest 
before  the  principal  is  due,  is  taking  it  before  it  is  due,  as 
as  far  as  equities  are  concerned,  if  it  is  done  in  good 
faith.« 

Usury  in  a  debt  secured  by  mortgage  does  not  affect 
the  validity  of  the  mortgage  and  is  not  available  at  law, 
in  defence  of  an  action  founded  on  the  mortgage.^ 

An  exchange  of  notes  is  binding,  thus  making  the 
payees  holders  for  value.® 

The  time  of  the  inception  of  notes  is  a  question  of  fact. '^ 

'  2  Denio  (N.  Y.)  C21  (1846). 

2  10  Paige  (N.  Y.)  32G  (1843)  ;  2  Denio  (N.  Y.)  621  (1846). 

^1  H.  &  G.  (Md.)  477(1827). 

*  12  Ga.  371  (1853). 

5  23  Ala.  537  (1853). 

«  108  Mass.  497  (1871). 

'64  Ala.  501  (1879). 

8  12  Ired.  L.  (N.  C.)  334  (1851). 

97HUU  (N.  Y.)  576  (1876). 


294  THE   LAW   OF   INTEREST. 

Banks  arc  also  governed  by  these  rules  relating  to  usury 
in  the  transfer  of  business  and  accommodation  papcr.^ 

2.  Ustoppel.  A  party  may  by  his  representations  es- 
top himself  from  setting  up  the  defence  of  usury  in  an 
action  against  him  by  the  party  to  whom  such  represen- 
tations were  made.  Where  the  maker  represents  to  the 
purcliascr  that  the  instrument  sued  on  is  not  usurious, 
he  is  estopped. 2  Also,  where  upon  an  assignniont  of  a 
mortgage,  the  mortgagor  gave  a  written  certificate  that 
the  mortgage  was  a  good  and  valid  lien  upon  the  prem- 
ises, and  that  there  then  existed  no  legal  or  equitable 
defence  thereto,  he  was  estopped.^  In  each  of  these  cases 
the  party  purchasing  must  take  the  note  upon  the  repre- 
sentations of  the  maker  made  at  that  time.  The  rule 
applies  to  all  parties.* 

Where  an  illegal  reservation  was  made  ])y  the  mortga- 
o-ee,  and  the  morto^agor  afterward  effected  a  new  loan  by 
the  assignment  of  the  mortgage,  representmg  it  to  be 
good,  he  is  precluded  from  setting  up  the  original  usury 
against  the  assignee  and  those  claiming  under  him.^ 

If  a  mortgagor  induces  his  mortgagee  to  secure  a  third 
person's  chose  in  action,  etc.,  to  be  assigned  to  him  on 
account  of  the  mortgage,  ho  is  estopped  from  setting  up 
usury  in  such  chose  in  action,  etc.,  as  a  defence  against  his 
mortizagee.^ 

r>ut  the  maker  of  an  usurious  note  is  not  barred  of  the 
defence  of  usury  by  silently  standing  by  when  it  was  trans- 

J  G  O.  St.  527  (1856). 

2  15  Iowa  5G3  (1804)  ;  2-1  Iowa  -ill  (1SG8)  ;  9  Ilun  (X.  Y.)  2G3  (187G)  ; 
72  N.  Y.  108  (1878). 

3  30  Amcr.  Kep.  CG9,  note  (1881)  ;  1  C.  E.  Gr.  (N.  J.)  210  (18G3)  ;  85 
N.  Y.  30-t  (1881). 

*  3  Keyes  (N.  Y.)  G09  (18G7) ;  35  How.  Pr.  (N.  Y.)  477  (18G7). 
"^SC.E.  Gr.  (N.  J.)  12G  (1872). 
6  85  Ala.  304,  417,  459  (1888). 


USURY.  295 

ferred  to  an  innocent  holder,  and  not  disclosing  the  fact 
of  the  usury ;  ^  nor  by  his  subsequent  promise  to  pay  it, 
the  plaintiffs  having  parted  with  nothing  on  the  strength  of 
the  promise ;  -  nor  is  a  borrower  precluded  from  setting 
up  usury  in  a  prior  mortgage,  because  he  has  meanwhile 
conveyed  away  the  premises  with  warranty,  by  a  deed 
intended  only  as  security,  and  a  reconveyance  to  him  having 
»  been  subsequently  made.^ 

The  Ohio  court  has  decided  that  where  a  national  bank 
loans  one  of  its  directors  a  sum  of  money,  which  loan  is 
usurious,  the  borrower  is  not  estopped  from  the  recovery 
of  the  usurious  interest  which  he  paid  because  he  is  an 
officer  of  the  bank.* 

3.  Judgment.  A  judgment  rendered  is  conclusive  upon 
the  question  of  the  legality  of  the  action,^  unless  the  suit 
is  brought  to  evade  the  usury  law  ;  ^  and  if  the  judgment 
is  satisfied  the  usury  included  therein  cannot  be  recovered,^ 
even  in  equity,^  although  the  judgment  was  obtained  by 

'  1  Kelley  (Ga.)  392  (1846). 

2  16  Iowa  278  (1864). 

^  65  Barb.  (N.  Y.)  30  (1873)  ;  16  Hnu  (N.  Y.)  487  (1879). 

*  34  0.  St.  142  (1877). 

5  48  Ga.  55  (1873)  ;  66  Ga.  102  (1880)  ;  74  Ga.  701  (1885)  ;  29  111.  184 
(1862);  83  Ind.  147  (1882);  9  Iowa  201  (1859);  22  Iowa  543  (1867); 
37  Iowa  325  (1873)  ;  58  Iowa  529  (1882)  ;  2  Red.  (Me.)  17  (1850)  ;  12 
Mass.  268  (1815)  ;  2  Cai.  (N.  Y.)  150  (1804)  ;  20  Johns.  (N.  Y.)  285 
(1822)  ;  1  N.  Y.  (1  Comst.)  274  (1848)  ;  5  N.  Y.  Leg.  Obs.  226;  21  S. 
W.  Rep.  (Tex.)  69  (1893)  ;  19  Vt.  496  (1847). 

«  46  Iowa  386  (1877)  ;  50  Iowa  671  (1879)  ;  55  Iowa  3SG  (1880)  ;  58 
Iowa  529  (1882).  It  must  be  shown  that  it  was  done  to  evade  the 
usury  law  in  such  a  case.  58  low^a  529  (1882). 

7  2  Red.  (Me.)  17  (1850)  ;  12  Mass.  268  (1815)  ;  83  Pa.  St.  109  (1876)  ; 
99  Pa.  St.  265  (1881);  121  Pa.  St.  582  (1888)  ;  19  Vt.  496  (1847)  ;  contra, 
3  Lit.  (Ky.)  109  (1823)  ;  4  J.  J.  Mar.  (Ky.)  88  (1830)  ;  8  B.  Mon.  (Ky.) 
28  (1847)  ;  3  Met.  (Ky.)  275  (1860)  ;  6  Bush  (Ky.)  95  (1869). 

8  9  Paige  (N.  Y.)  165  (1841) ;  contra,  4  Mon.  (Ky.)  488  (1827). 


296  THE    LAW    OF    INTEREST. 

default,^  or  confession.-  The  Pennsylvania  court,  how- 
ever, will,  if  the  debtor  has  paid  usurious  interest  upon  a 
judgment,  and  confessed  a  judgment  of  revival,  neverthe- 
less open  the  judgment,  and  allow  him  a  credit  for  the 
usurious  interest  paid  upon  the  principal.'^  If  the  statute 
allows  usury  paid  to  be  recovered,  it  may  be  recovered  even 
though  it  has  been  paid  on  a  judgment. 

Wlicn  the  court  has  authorized  and  approved  an  usu- 
rious mortgage,  it  will  not  afterward  entertain  a  bill  to 
question  its  validity.* 

A  new  note  given  in  payment  of  an  usurious  judgment 
is  a  final  settlement  of  the  judgment  and  the  usury  can- 
not be  recovered.^  If  the  note  is  given  at  about  the 
time  the  judgment  is  recovered,  the  court  may  consider  it 
a  device  to  evade  the  usury  law.^ 

A  creditor  must  first  establish  his  claim  by  judgment, 
before  he  can  recover  against  third  persons  who  receive 
the  usury  from  the  debtor.^ 

"Where  courts  allow  usury  to  be  recovered  after  having 
been  paid  upon  a  judgment,  the  judgment  is  not  otherwise 
impeached.^ 

An  award  is  not  conclusive,  that  is.  if  it  iiives  illesral 
interest,  on  a  suit  to  recover  the  amount  of  the  award  usury 
can  be  pleaded.'' 


•  12  Mass.  268  (1815). 

-  55  Ark.  536  (1892)  ;  IS  S.  TV.  Rep.  (Ark.)  931  (1892)  ;  2  Bail.  (S. 
C.)  54  (1830)  ;  contra,  50  Tenn.  89  (1873). 
='86  Pa.  St.  457  (1878). 
•«6GMa.  171  (1886). 

s  99  Pa.  St.  265  (1881)  ;  121  Pa.  St.  582  (1888). 
«  126  Pa.  St.  415  (1889). 
'oOTenu.  23  (1873). 
«105N.  C.  498  (1890). 
3  12  lud.  187  (1859). 


USURY.  297 

"\Yhere  a  judgment  on  an  usurious  debt  was  obtained, 
and  a  sheriff's  sale  took  place  under  it,  bis  deed  is  not  in- 
fected with  the  usury,  the  creditor  being  the  purchaser.^ 

If  usurious  interest  is  paid  on  a  note  after  execution,  it 
amounts  to  a  payment  on  the  principal ;  and  if  the  amount 
thus  paid  exceeds  the  principal,  it  may  be  recovered, ^ 
says  the  Indiana  court. 

A  note  executed  for  a  judgment  obtained  upon  an  usu- 
rious consideration  is  void,  and  by  pleading  the  usury  in 
an  action  on  it  may  be  defeated  ;  judgments  on  usurious 
considerations  not  being  embraced  within  the  words  of  the 
statute.^ 

A  written  statement  authorizing  the  entry  of  judgment 
does  not  before  the  judgment  is  entered  estop  the  party 
from  pleading  usury."* 

Where  a  judgment  is  given  on  two  notes,  one  of  which 
is  usurious  and  the  other  valid,  it  does  not  consolidate 
them,  and  they  will  afterward  be  distinctly  regarded  in 
usury  proceedings.^ 

4.  Laches.  Laches  in  setting  aside  a  judgment,  as  for 
two  years,  is  a  bar  to  the  recovery  of  usury  paid.*' 

5.  JVovation.  A  novation  does  not  relieve  the  contract 
of  usury,  but  usury  paid  and  the  entire  debt  discharged 
by  a  novation,  before  usury  is  reclaimed,  its  recovery  is 
barred  if  the  statute  of  limitations  has  run  out.^  See  page 
232. 

6.  Payment.  A  free  and  voluntary  payment  of  usury 
bars  any  right  of  recovery,^  unless  the  statute  provides 

1  74  Ga.  4G5  (1885). 

2  23  lud.  4  (1864). 

M  Mon.  (Ky.)  266  (1824). 

*  20  Iowa  578  (1866).  m 

*91Pa.  St.  516  (1879).  *' 

M35U.  S.  304  (1889). 

7  llBnsh  (Ky.)  393  (1875). 

»  C7  Mich.  237  (1887)  ;  62  Pa.  St.  481  (1869). 


298  THE    LAW    OF   INTEREST. 

otherwise.  As  where  an  usurious  debt  has  hecn  settled 
1)V  the  creditor  talking  in  satisfaction  tliereof  property 
uiortgMgcd  to  secure  its  payment,  equity  will  not  open  the 
transaction  on  the  ground  of  usury  alone. ^ 

A  subsequent  loan  is  valid,  but  the  jury  nmst  1»e  satis- 
fied that  it  is  not  a  device  to  evade  the  usury  statute. - 

Such  payment  of  usurious  interest  cannot  be  by  another 
obligation  of  the  same  borrower  to  the  same  lender,  al- 
though the  engagement  of  a  new  surety,  except  only  where 
an  innocent  tiiird  party  intervenes.^ 

An  absolute  conveyance  of  land  upon  trust  to  sell  and 
pa}^  certain  debts,  cannot  be  avoided  on  the  ground  that 
the  debts  are  usurious ;  such  conveyance  being  more  than 
a  mere  security  for  the  payment  of  the  debts  ;  it  is  in  the 
nature  of  a  payment,  and  is  so  treated.* 

Wiien  a  testatrix  in  her  lifetime  submitted  accounts  to 
arbitration  and  was  satisfied  with  the  award  and  pcrfcUMued 
it,  her  representatives  cannot  open  the  settlement  on  the 
ground  of  usury  in  the  accounts.'^ 

For  usury  paid  on  judgments,  see  page  295. 

7.  Release.  The  possessor  of  a  right  to  claim  usury 
can  release  it;*'  as  by  a  discharge  under  seal  ;^ but  to  be 
effectual  it  must  be  subsequent  to  the  usurious  contract  ;** 
as,  if  done  at  the  same  time,  it  is  deemed  a  device  to  evade 
the  statute.^ 

8.  Ilepeal  of  usury  laiv.    If  the  usury  statute  is  repealed 

'  18  Ala.  COS  (1851). 

2  C2  Pa.  St.  481  (1869). 

3  (12  Pa.  St.  481  (18G9). 

*  1  Johns.  Cas.  (N.  Y.)  158  (1799). 

*  1  McC.  Ch.  (S.  C.)  408  (1826). 
".32  Vt.  93  (1859). 

7  54Vt.  245  (1881). 

»  64  Vt.  245  (1881),  568  (1882). 

•»13B.  Mob.  (Ky.)  389  (1852). 


USURY.  299 

before  ii  suit  for  the  recovery  of  usury  paid  is  brought,  or, 
if  brought,  before  judgment  is  rendered,  or  before  or  dur- 
ing the  pendency  of  a  suit  in  wliich  usury  is  pleaded  in 
defence,  the  claim  for,  or  defence  of,  usury  will  be  gone. 
But  if  a  constitution  repeals  the  usury  laws  existing  usu- 
rious contracts  are  not  thereby  legalized.^ 

9.  Statute  of  limitations.  Usury  paid  must  be  sued 
for  within  the  time  allowed  by  the  statute,  or  the  right  of 
recovery  will  be  barred.-  The  statute  runs  from  the  time 
that  tlie  money  is  paid.^  The  rule  is  the  same  in  suing  to 
recover  a  penalty/ 

While  any  part  of  an  usurious  debt  remains  unpaid, 
the  statute  of  limitations  will  not  cut  ofl"  the  right  of  the 
party  who  has  paid  the  usurious  interest  to  recover  it.^ 

See  chapter  twelve,  for  further  rules  and  decisions. 

10.  Waiver.  The  borrower  may  by  his  own  act  or 
neglect  forfeit  his  right  to  recover  usury.*'  Usury  will 
not  be  considered  when  a  mortgagor,  having  tendered  the 
amount  of  the  mortgage  debt,  and  demanded  its  discharge, 
asks  for  the  statutory  penalty  for  not  discharging  the 
morto;ao:e.^ 

The  borrower  must  take  advantage  of  the  defence  at 
his  first  opportunity, — he  will  not  be  allowed  to  set  it  up 
afterward.^ 

The  defence  may  be  waived,^  but  only  by  a  subsequent 


1  39  Tex.  365  (1873). 
r,l  N.  H.  147  (1881). 
^  59  Ga.  546  (1877)  ;  61  N.  H.  147  (1881). 
"eiN.  H.  147  (1881). 
*  18  Tex.  794  (1857)  ;  39  Tex.  365  (1873). 

6  8  Ala.  643  (1842) ;  82  Ala.  363  (1886)  ;  6  Greeul.  (Me.)  35  (1829) ;  5 
Hubb.  (Me.)  312  (1860). 
'  41  Mich.  371  (1879). 

8  13  ret.  (U.  S.)  65  (1839). 

9  38  Mich.  200  (1878). 


300  THE    LAW    OF   INTEREST. 

aiirecment  ;^  ns  Avherc  a  mortgagor  conveys  land  subject 
to  an  usurious  mortgage,  the  purchaser  cannot  set  it  up.^ 

A  forfeiture  may  also  be  waived,  and  the  debtor  may 
insist  upon  its  application  to  the  payment  of  the  debt,^ 

The  New  York  supremo  court  holds  that  an  agreement 
to  waive  and  aI)andon  the  defence  of  usury  and  never  set 
it  up  is  void  and  cannot  be  enforced ;  nor  does  it  create 
an  estoppel  as  between   tlie  parties.^ 

The  debtor  is  not  obliged  to  avail  himself  of  the  de- 
fence of  usury,  and  his  omission  to  do  so  is  not  a  fraud 
upon  other  creditors ;  it  is  a  personal  defence,  which  he 
may  waive. "^ 

The  defendant  can  waive  in  court  the  privilege  of  set- 
ting up  usury  in  defence  when  sued,  expressly  or  impli- 
edly.*' But  a  borrower  by  a  contemporaneous  agreement 
cannot  waive  the  right  to  retain  or  recover  usurious 
interest." 

"Where  in  equity  a  mortgagor  seeks  to  restrain  his  mort- 
gagee from  selling  mortgaged  property  because  of  usury, 
an  injunction  will  l)e  dissolved  if  the  mortgagee  waives  the 
usury. ^  The  mortgagor  must  pay  the  principal  and  legal 
interest,  however. 

>  28  Ind.  435  (1867)  ;  72  Pa.  St.  54  (1872). 

2  9  C.  E.  Gr.  (N.  J.)  120  (1873)  ;  1  McCart.  (N.  J.)  56  (1861)  ;  contra, 
1  Stock.  (N.  J.)  807  (1852). 
•'  78  Ivy.  367  (1880) ;  7  O.  St.  387  (1857). 
'  22  Hun  (N.  Y.)  264  (1880). 

6  9X.  Y.  (5  Seld.)  73  (1853). 
»  21  Tex. 441  (1858). 

7  72  Pa.  St.  54  (1872). 
«  92  N.  C.  48  (1885). 


CHAPTER  XI. 

INTEREST  IN  EQUITY. 

THE  rule  in  England  for  the  allowance  of  interest  in 
equity  appears  to  be  narrower  than  it  is  in  America 
at  law.^  Here,  upon  demands  bearing  interest  at  law, 
the  court  of  equity  is  bound  to  allow  it ,2  but  where  the 
demand  does  not  bear  interest  at  law,  it  will  or  will  not 
be  allowed  according  to  the  equity  of  the  case,  in  the  dis- 
cretion of  the  court  .^  It  is  generally  deemed  equitable 
to  allow  interest  on  all  sums  which  are  due  and  payable  ;* 
but  it  will  not  decree  current  interest  unless  the  lawwould.^ 

Compound  interest  is  not  allowable  in  equity  as  a  gen- 
eral rule,^  as  it  is  deemed  inequitable ;  but  where  it  is 
necessary  to  reach  certain  profits  and  to  do  justice  in  a 
case  annual  rests  are  allowed.^ 

Wherever  the  law  prohibits  the  payment  of  the  princi- 
pal, interest  is  not  demandable  during  the  existence  of 
the  prohibition,  and  the  rule  is  the  same  in  courts  of 
equity  as  in  courts  of  law.^ 

'  11  N.  H.  501  (1841). 

2  23  Ala.  296  (1853)  ;  52  Ala.  444  (1875)  ;  1  Mon.  (Ky.)  150  (1824)  ; 
6  J.  J.  Mar.  (Ky.)  535  (1881)  ;  3  Dana  (Ky.)  297  (1835). 

3  3  Rich.  Eq.  (S.  C.)  465  (1851)  ;  4  Rich.  Eq.  (S.  C.)  92  (1851). 

*  UN.  H.  501  (1841). 

*  6  J.  J.  Mar.  (Ky.)  535  (1831). 
«  Conf.  (N.  C.)  435  (1800). 

^  11  N.  H.  501  (1841). 

»  2  DaU.  (Pa.)  102  (1789). 

(301) 


302  THE    LAW    OF    INTEREST. 

In  equity,  interest  is  iiUowcd  on  the  balimce  due  on  a 
buildino-  contract,  though  the  contract  was  never  fully 
performed.^ 

Although  equity  cannot  carry  interest  beyond  the  pen- 
alty of  a  bond,  yet  it  does  not  suffer  the  mortgagor  to 
redeem  without  paying  all  that  is  due.^ 

'  7  Dana  (Ky.)  240  (1838). 

-  McM.  Eq.  (S.  C.)  157  (1841). 


CHAPTER  XII. 

EFFECT  OF  STATUTE  OF  LIMITATIONS  UPON  INTEREST. 

THE  statute  of  limitations  has  the  same  effect,  generally, 
upon  interest  due  as  it  has  on  other  debts.  All  the 
interest  that  has  accrued  during  the  statutory  period  next 
preceding  the  beginning  of  the  suit  to  recover  it,  is  Avithin 
the  recoverable  period,  whether  it  is  contractual  interest, 
or  interest  allowed  as  damages.^  As,  for  instance,  if  a 
note  due  four  years  from  date,  bearing  interest,  is  sued  on 
after  it  has  been  due  five  years,  no  part  of  the  interest  is 
barred  (although  the  statute  fixes  the  time  within  which 
suits  must  be  brought  at  six  years),  and  interest  for  the 
nine  years  can  be  collected. ^  But  if  interest  is  payable 
on  a  note  annually,  so  much  as  accrued  thereon  prior  to 
six  years  before  the  conmiencement  of  the  action  to  re- 
cover it  is  barred  by  the  statute,  although  the  note  itself, 
l)eing  on  time,  together  with  the  interest  which  accrued 
within  the  statutory  period  is  not  barred.^ 

Interest  coupons  are  held,  however,  not  to  be  barred 
until  the  bonds  themselves  are.* 

Within  the  confederate  states,  the  statute  of  limitations 
was  suspended  during  the  Rebellion,  whether  in  actions 

>  1  Y.  &  Coll.  Ch.  Cas.  (Eug.)  151  (1841). 

2  2  Cush.  (Mass.)  92  (1848). 

3  5Greenl.  (Me.)  81  (1827). 

*  65  Cal.  67  (1884)  ;  19  Miuu.  338  (1873). 

(303) 


304  THE    LAW    OF    INTEREST. 

between  belligerents  or  between  residents  within  those 
states.^ 

In  an  action  brought  to  recover  usurious  interest  paid 
at  dillcrent  times,  it  was  held  that  all  interest  that  had 
been  paid  within  the  statutory  period  before  bringing  the 
suit  could  be  recovered ;-  that  is,  the  statute  begins  to  run 
at  the  time  it  is  paid.''  But  wliilo  any  part  of  the  usurious 
debt  remains  unpaid,  the  statute  will  not  cut  off  tlie  right 
of  recovery.* 

Extension.  Where  interest  has  been  paid  in  advance, 
and  the  time  thus  extended  for  a  contract's  maturity,  the 
statute  of  limitations  does  not  begin  to  run  until  the  end 
of  the  period  for  which  the  interest  was  thus  paid.^ 

The  payment  of  interest  l)y  one  of  several  promissors 
in  a  note  takes  it  out  of  the  statute  of  limitations  as  to  all 
the  others.*^  The  court  in  Pennsylvania  holds,  however, 
that  this  rule  does  not  apply  to  a  joint  and  several  note.^ 

The  payyient  of  interest  and  indorsement  on  a  joint  and 
several  note  l)y  a  deceased  co-maker,  in  a  suit  brought 
against  the  living  maker,  and  the  admission  of  its  validity 
by  the  maker  sued,  takes  it  out  of  the  statute  of  limita- 
tions.^ 

Revival.  The  payment  of  interest  on  a  debt  is  a  suf- 
ficient recognition  of  the  debt,  as  due  at  the  time  of  such 
l)ayment  to  take  the  case  out  of  the  statute  of  limitations.'-* 

'  37  Ark.  4G3  (1881). 

2  3N.  II.  489  (182G). 

»  59  Ga.  54G  (1877)  ;  CI  X.  II.  147  (1881). 

*  18  Tex.  794  (1857)  ;  39  Tex.  3G5  (1873). 

»  15  N.  11.520  (1844). 

«51  Mo.  31  (1872). 

'  89  Pa.  St.  331  (1879). 

»  55  Md.  384  (1880). 

»  19  Couu.  591  (1849)  ;  1  Bail.  (S.  C.)  148  (1829). 


EFFECT    OF    STATUTE    OF    LIMITATIONS.  305 

A  debt  barred  by  the  statute  aud  revived  by  an  acknowl- 
edgment, bears  interest  for  the  whole  time,  as  though  it 
had  never  been  barred.^  It  is,  however,  held  in  England 
that  the  payment  of  the  principal  of  a  debt  barred  by  the 
statute  of  limitations  does  not  revive  the  creditor's  claim 
for  interest  thereon,  especially  when  the  debtor  says  he 
does  not  intend  to  revive  the  interest.- 

'  1  Sw.  Dig.  715;  79  Ga.  301  (1887)  ;  16  Vt.  297  (1844). 
"  12  Moore  (Eng.)  557  (1827)  ;  4  Bing.  (Eng.)  313  (1827). 
20 


CHAPTER  XIII. 

INTEREST  STATUTES. 

LEGISLATIVE  acts  to  regulate  interest  are  in  dero- 
gation of  the  common  law,  and  must  be  strictly 
construed.^  So  with  usury  statutes.-  Each  state's  con- 
struction of  its  own  statutes  controls  in  other  states.^ 

Force  in  otJier  states.  If  a  contract  is  not  usurious 
where  it  is  made  and  is  to  be  performed,  it  is  good  cver}-- 
where.*  If  a  statute  declares  usurious  contracts  void  or 
voidable,  they  are  so  regarded  everywhere  ;  but  if  the 
statute  makes  it  simply  a  penal  ofTonce  to  take  or  contract 
for  usury,  the  usury  is  not  regarded  in  another  jurisdic- 
tion.^ 

"While  the  courts  of  one  state  do  not  enforce  the  penal 
statutes  of  another  state,  yet  when  a  contract  made  with 
reference  to  the  laws  of  another  state  is  usurious  there, 
the  forfeiture  provided  by  such  laws  is  enforced. "^ 

A  statute  that  relates  to  the  remedy  mcrel}^  can  have  no 
force  in  another  state, ^  and  penalties  given  by  the  usury 
laws  of  one   state  are  not  recoverable  in  the    courts  of 

•  11  Cal.  U  (1858). 

2  HI  U.  S.  31  (1884). 

3  59  Vt.  120  (1886). 

*  33  Conn.  570  (18CG) ;  14  Bradw.  (111.)  405  (1883). 
<'  4  Gilm.  (111.)  521  (1847)  ;  59  Vt.  120  (1886). 

8  22  Iowa  194  (1807).  Sec  59  Vt.  120  (1886). 
■>  32  N.  11.  5G0  (1856)  ;  43  N.  II.  548  (1862)  ;  12  Vt.  464  (1840). 
(306) 


INTEREST    STATUTES.  307 

another  state,^  that  is,  in  a  state  other  than  that  in  which 
the  contract  was  made. 

Change  of  statute.  Existing  contracts  for  interest  are 
not  affected  by  changes  in  the  statute,  whether  usurious 
or  not.^  The  law  in  force  when  the  contract  is  made 
governs  as  to  rights  of  parties.^ 

The  right  to  interest  on  interest  when  it  exists,  cannot 
be  impaired  by  legislation  declaring  the  true  intent  and 
meaning  of  a  statute  previously  existing.^ 

Interest  allowed  as  damages,  however,  varies  with  the 
statute.^  So,  if  no  rate  of  contractual  interest  has  been 
agreed  upon  it  varies  with  the  statute.*^ 

A  statute  regulating  the  rate  of  interest  after  maturity 
of  a  debt  does  not  affect  existins:  contracts  that  became 
due  before  the  law  was  passed.^ 

By  the  repeal  of  a  penal  statute  all  penalties  fall,  even 
if  given  to  individuals,  and  a  suit  is  pending  for  them.® 

The  parties  to  usurious  contracts  hold  any  right  they 
have  to  the  penalties  given  by  the  law,  subject  to  a  modi- 
fication or  repeal  by  the  legislature,  and  a  consequent 
direct  or  indirect  validation  of  the  contracts.'' 

Statutes  making  valid  a  void  contract,^''  or  imposing  a 

1  59  Vt.  120  C188G).  See  22  Iowa  194  (1867). 

2  1  Fla.  356  (1847)  ;  5  Fla.  345  (1853)  ;  61  Ga.  458  (1878)  ;  62  Ga.  86 
(1878);  7  Alleu  (Mass.)  139  (1863);  27  Neb.  644  (1889);  28  Neb.  210 
(1889) ;  58  Huu  (N.  Y.)  575  (1891)  ;  3  Ore.  129  (1869) ;  29  Grat.  (Va.) 
1  (1877). 

3  17  Neb.  491  (1885). 

4  104  U.  S.  668  (1881). 

»  9  C.  E.  Gr.  (N.  J.)  451  (1874)  ;  4  Stew.  (N.  J.)  91   (1879)  ;  12  Vr. 
(N.  J.)  349  (1879)  ;  28  O.  St.  266  (1876). 
«  17  Stew.  (N.  J.)  56  (1888). 
'  12  La.  Ann.  793  (1857)  ;  15  La.  Ann.  17  (1860). 
8  30  Conn.  149  (1861). 
930  Conn.  149  (1861). 
'"30  Conn.  149  (1861). 


308  THE    LAW    OF    INTEREST. 

ponnltv  for  receiving  interest  on  an  existing  usurious  con- 
tract/ or  reducing  the  penalty  for  receiving  usurious  in- 
terest, ilo  not  impair  the  obligation  of  a  contract  within 
the  meaning  of  the  United  States  constitution  ;  -  neither 
are  they  retroactive.^ 

TEXT    OF   THE    GENERAL   INTEREST   STATUTES. 

Below  is  given  the  text  of  the  general  interest  statutes 
in  force  in  the  states  and  countries  named. 

ENGLAND. 

"Upon  hearing  the  Appeal  if  it  shall  appear  to  the  House  of 
Lords  to  be  just  to  decree  or  adjudge  the  payment  of  interest, 
simple  or  compound,  by  any  of  the  parties  in  the  cause  to  which 
such  ap[)eal  relates,  it  shall  be  competent  to  the  said  House  to 
decree  or  adjudge  the  payment  thereof,  as  the  said  House  in 
its  sound  discretion  ahall  think  meet."^ — 48  Geo.  Ill,  ch.  151, 

§  19. 

"From  and  after  the  passing  of  this  Act,  it  shall  and  may  be 
lawful  to  and  for  the  said  Chief  Justices,  Chief  Baron,  Justices 
and  Barons,  in  all  cases  now  depending,  or  which  hereafter 
shall  depend  in  the  said  court,  where  tlie  defendant  in  error 
shall  have  got  judgment  for  any  sum  of  money,  whether  for 
debt,  damages  or  costs,  or  all  or  any  two  of  them,  and  such 
judgment  shall  be  affirmed  by  the  said  court,  then  not  only  to 
give  such  judgment  of  aflirmance,  but  also  to  order  that  interest 
be  forthwith  computed  in  open  court,  at  such  rate,  not  exceed- 
ing the  legal  interest  for  the  time  being,  as  such  court  shall 
direct,  from  the  day  oi  the  allowance  of  the  writ  of  error  on 
which  they  shall  so  give  judgment  to  the  day  of  so  giving  the 
same,  on  the  sura  so  adjudged  to  the  defendant  in  error  as 
aforesaid ;  and  to  order  that  the  amount  of  such  interest  shall 
be  included  in  their  judgment,  in  addition  to  the  sum  so  thereto- 
fore adjudged,  and  to  the  costs,  if  they  shall  think  proper  to 
award  costs  as  aforesaid."^ — 1  Geo.  IV,  ch.  65,  ^  7. 

'  27  S.  C.  110(1887). 

2  84  111.  331  (1868). 

3  27  S.  C.  110  a887). 

••  This  statute  relates  to  Scotland,  and  is  applicable  to  any  appeal  to 
the  House  of  Lords. 

*  This  statute  relates  to  Ireland,  aiid  applies  to  appeals  in  the  Court 
of  Exchequer  Chamber. 


INTEREST   STATUTES.  309 

"Upon  all  debts  or  sums  certain,  payable  at  a  certain  time 
or  otherwise,  the  jury  on  the  trial  of  any  issue,  or  on  any  in- 
quisition of  damages,  may,  if  they  shall  think  fit,  allow  interest 
to  the  creditor  at  a  rate  not  exceeding  the  current  rate  of  in- 
terest, from  the  time  when  such  debts  or  sums  certain  Avere 
payable,  if  such  debts  or  sums  be  payable  by  virtue  of  some 
written  instrument  at  a  certain  time,  or  if  payable  otherwise, 
then  from  the  time  when  demand  of  payment  shall  have  been 
made  in  writing,  so  as  such  demand  shall  give  notice  to  the 
debtor  that  interest  will  be  claimed  from  the  date  of  such  de- 
mand until  the  term  of  payment ;  provided  that  interest  shall 
be  payable  in  all  cases  in  which  it  is  now  payable  by  law."^ — 
3  &4  Wm.  IV,  ch.  42,  §  28. 

"The  jury  on  the  trial  of  any  issue,  or  on  any  inquisition  of 
damages,  may,  if  they  shall  think  lit,  give  damages  in  the  nature 
of  interest,  over  and  above  the  value  of  the  goods  at  the  time 
of  the  conversion  or  seizure,  in  all  actions  of  trover  or  trespass 
de  bonis  asportatis,  and  over  and  above  the  money  recoverable 
in  all  actions  on  policies  of  assurance  made  after  the  passing 
of  this  act."  ^—3  &  4  TFm.  IV,  ch.  42,  §  29. 

"P^very  judgment  debt  shall  carry  interest  at  the  rate  of  four 
pounds  per  centum  per  annum  from  the  time  of  entering  up  the 
judgment,  or  from  the  time  of  the  commencement  of  this  act 
in  cases  of  judgments  then  entered  up  and  not  carrying  interest, 
until  the  same  shall  be  satisfied,  and  such  interest  maybe  levied 
under  a  writ  of  execution  on  such  judgment." —  1  &  2  Vict.,  ch. 
110,  §  17. 

An  execution  ordered  to  be  registered  with  the  "Executions 
of  Charge  and  Denunciation,  .  .  .  shall  have  the  effect  to  accu- 
mulate the  debt  and  interest  into  a  capital  sum,  whereon  inter- 
est shall  thereafter  become  due. "3 — 1  &2  Vict.,  ch.  114,  §§  5,  10. 

"Every  judgment  debt  due  upon  any  judgment  not  confessed 
or  recovered  for  any  penal  sum  for  securing  principal  and  in- 
terest shall  carry  interest  at  the  rate  of  four  pounds  per  centum 
per  annum  from  the  time  of  entering  up  the  judgment,  or  from 
the  time  of  the  commencement  of  this  act  in  cases  of  judgments 
then  entered  up  and  not  carrying  interest,  until  the  same  shall 
be  satisfied,  and  such  interest  may  be  levied  under  a  writ  of 
execution  as  such  judgment."*^ — 3  &  4  Vict.,  ch.  105,  §  26. 

>  This  aud  the  following  section  were  reenacted  for  Ireland  3  &  4 
Vict.,  ch.  105,  §§  53,  54,  to  which  was  then  added  a  clause  providing 
that  interest  be  allowed  for  not  more  than  six  years. 

2  See  preceding  foot  note. 

^  This  statute  concerns  Scotland. 

■•  This  statute  concerns  Ireland. 


310  THE   LA^V    OF    INTEREST. 

"If  :iuv  person  shall  sue  out  any  writ  of  error  upon  any 
judgnieut  whatsoever  given  in  any  court  in  any  action  personal, 
ancf  the  court  of  error  shall  give  judgment  for  the  defendant 
thereon,  then  interest  shall  be  allowed  by  the  court  of  error  for 
such  time  as  execution  has  been  delayed  by  such  writ  of  error 
for  the  delaying  thereof."^— 3  &  4  Vict.,  ch.  105,  §  55. 

''From  and  after  the  passing  of  this  act  every  bank  in  Scot- 
land with  which  any  money  shall  have  been  or  shall  be  deposited 
or  lodged  by  any  judicial  factor,  tutor,  or  curator,  or  under 
authority  of  any  court  in  Scotland,  or  with  reference  to  any 
suit  in  any  court  in  Scotland,  whether  on  deposit  receipt  or  on 
account  current,  or  otherwise,  shall  once  at  least  in  every  year 
accumulate  the  interest  with  the  principal  sum,  so  that  both 
shall  thereafter  bear  interest  together  as  principal ;  and  any 
bank  failing  so  to  do  shall  be  liable  to  account  as  if  such  money 
had  been  so  accumulated."- — 12  &  13  Vid.,  ch.  51,  §  37. 

"In  any  case  in  which  duty  payable  in  respect  of  any  legacy 
or  residue  under  the  legacy  duty  acts  now  in  force,  or  in  re- 
spect of  any  succession  under  the  succession  duty  act,  1853,  is 
or  shall  be  in  arrear,  the  person  by  whom  the  arrears  of  duty 
may  be  payable  shall  be  liable  to  pay  interest  thereon  at  the 
rate  of  four  pounds  per  centum  xter  annum ;  and  such  interest 
shall  be  recoverable  by  the  connuissioners  of  inland  revenue  in 
the  same  manner  as  the  arrears  of  duty,  and  as  part  thereof." 
—31  &32  Vict.,  ch.  124,  §  9. 

The  general  usury  statute  of  England  was  repealed  in  1854. 

CANADA. 

"P^xcept  as  otherwise  provided  by  this  or  l)y  any  other  Act 
of  the  Parliament  of  Canada,  any  person  may  stipulate  for, 
allow  and  exact,  on  any  contract  or  agreement  Avhatsoever,  any 
rate  of  interest  or  discount  which  is  agreed  upon." — E.  S.  Can., 
ch.  127,  §  1. 

'•Whenever  interest  is  payable  by  the  agreement  of  parties 
or  by  law,  and  no  rate  is  lixed  by  such  agreement  or  by  law, 
the  rate  of  interest  shall  be  six  per  centum  per  annum." — E.  S. 
Can.,  ch.  127,  §  2. 

"Whenever  any  principal  mone}'  or  interest  secured  by  mort- 
gage of  real  estate  is,  by  the  same,  made  payable  on  the  sink- 
ing fund  plan,  or  on  any  plan  under  which  the  payments  of 
principal  money  and  interest  are  blended,  or  on  any  plan  which 
involves  an  allowance  of  interest  in  stipulated  repayments,  no 
interest  whatever  shall  be  chargeable,  payable  or  recoverable, 

'  This  statute  concerns  Ireland. 
-  This  statute  concerns  Scotland. 


INTEREST    STATUTES.  311 

on  any  part  of  the  principal  money  advanced,  unless  the  mort- 
gage contains  a  statement  showing  the  amount  of  such  prin- 
cipal money  and  the  rate  of  interest  chargeable  thereon, 
calculated  yearly  or  half-yearly,  not  in  advance." — R.  ^.  Can., 
ch.  127,  §  o. 

"Whenever  the  rate  of  interest  shown  in  such  statement  is 
less  than  the  rate  of  interest  which  would  be  chargeable  by 
virtue  of  any  other  provision,  calculation  or  stipulation  in  the 
mortgage,  no  greater  rate  of  interest  shall  be  chargeable,  pay- 
able or  recoverable,  on  the  principal  money  advanced,  than  the 
rate  shown  in  such  statement." — B.  S.  Can.,  ch.  127,  §  4. 

"No  fine  or  penalty  or  rate  of  interest  shall  be  stipulated  for, 
taken,  reserved  or  exacted  on  any  arrear  of  principal  or  interest 
secured  by  mortgage  of  real  estate  which  has  the  effect  of  in- 
creasing the  charge  on  any  such  arrear  beyond  the  rate  of  iuter- 
est  payable  on  principal  money  not  in  arrear ;  but  nothing  in 
this  section  contained  shall  have  the  effect  of  prohibiting  a  con- 
tract for  the  payment  of  interest  on  arrears  of  interest  or  prin- 
cipal at  any  rate  not  greater  than  the  rate  payable  on  principal 
mouey  not  in  arrear." — R.  S.  Can.,  ch.  127,  §  5. 

'  'If  any  sum  is  paid  on  account  of  any  interest,  fine  or  pen- 
alty not  chargeable,  payable  or  recoverable  under  the  three 
sections  next  preceding,  such  sums  may  be  recovered  back, 
or  deducted  from  any  other  interest,  fine  or  penalty  chargeable, 
payable  or  recoverable  on  the  principal." — R.  S.  Can.,  ch.  127, 
§6. 

"Whenever  any  principal  money  or  interest  secured  by  mort- 
gage of  real  estate  is  not,  under  the  terms  of  the  mortgage, 
payable  till  a  time  more  than  five  years  after  the  date  of  the 
mortgage,  then,  if  at  any  time  after  the  expiration  of  such  five 
years,  any  person  liable  to  pay  or  entitled  to  redeem  the  mort- 
gage tenders  or  pays  to  the  person  entitled  to  receive  the  money, 
the  amount  due  for  principal  money  and  interest  to  the  time  of 
payment,  as  calculated  under  the  four  sections  next  preceding, 
together  wuth  three  months  further  interest  in  lieu  of  notice,  no 
further  interest  shall  be  chargeable,  payable  or  recoverable  at 
any  time  thereafter  on  the  principal  money  or  interest  due  under 
the  mortgage." — R.  S.  Can.,  ch.  127,  §  7. 

"The  provisions  of  the  five  sections  next  preceding  shall 
only  apply  to  moneys  secured  by  mortgage  on  real  estate  ex- 
ecuted after  the  first  day  of  July,  in  the  year  one  thousand 
eight  hundred  and  eighty." — R.  S..  Can.,  ch.  127,  §  8. 

ONTARIO   AND   QUEBEC. 

"The  two  sections  next  following  apply  to  the  Provinces  of 
Ontario  and  Quebec."— 22.  S.  Can.,  ch.  127,  §  9. 


312  THE    LAAV    OF    IXTEUEST. 

"Except  as  otbci-wise  provided  b}-  this  or  any  other  Act  or 
law,  uo  corporation  or  company  or  association  of  person-;,  not 
being  a  banlc,  authorized  by  hiw  before  the  sixteenth  day  of 
August,  one  thousand  eight  hundred  and  llftj^-eight,  to  lend  or 
borrow  money,  shall,  upon  any  contract,  take  directly  or  in- 
directly, for  loan  of  any  moneys,  wares,  merchandise  or  other 
conmiodities  whatsoever,  above  the  value  of  six  dollars  for  the 
advance  or  forbearance  of  one  hundred  dollars  for  a  year,  and 
so  afier  that  rate  for  a  greater  or  less  sum  or  value,  or  for  a 
longer  or  shorter  time. 

"Provided  that  any  insurance  company  incorporated  by  Act 
of  the  legislature  of  the  late  Province  of  Canada,  or  of  either 
of  the  late  Provinces  of  Upper  or  of  Lower  Canada,  or  by 
charter  from  Her  Majesty,  or  by  an  act  of  the  Parliament  of 
the  United  Kingdom,  and  any  corporation  constituted  for  re- 
ligious, charitable  or  educational  purposes,  in  the  Provinces  of 
Ontario  or  Quebec,  authorized  by  law  to  lend  or  borrow  money, 
may  stipulate  for,  allow  and  exact,  on  any  contract  or  agree- 
ment what  soever,  any  rate  of  interest  or  discount  wliich  is  agreed 
upon,  not  exceeding  eight  per  centum  per  annum." — E.  S. 
Can.,  ch.  127,  §  10. 

"All  bonds,  bills,  promissory  notes,  contracts  and  assurances 
whatsoever  made  or  executed  in  violation  of  the  provisions  of 
the  section  next  preceding,  whereupon  or  Avhereby  a  greater  in- 
terest is  reserved  and  taken  than  authorized  by  this  or  any  other 
Act  or  law,  shall  be  void ;  and  every  corporation,  company  and 
association  of  persons,  not  being  a  bank,  authorized  to  lend  or 
borrow  money  as  aforesaid,  which,  directl}'  or  indirectly,  takes, 
accepts  and  receives  a  higher  rate  of  interest,  shall  incur  a  pen- 
alty equal  to  treble  the  value  of  the  moneys,  wares,  merchan- 
dise, or  other  commodities,  lent  or  bargained  for  : 

"Such  penalty  may  be  recovered  by  action  in  any  court  of 
competent  jurisdiction,  and  one  moiety  thereof  shall  belong  to 
Her  Majesty  for  the  public  uses  of  Canada,  and  the  otiier  moiety 
to  the  person  who  sues  for  the  same." — li.  S.  Can.,  ch.  127, 
§  11. 

NOVA  SCOTIA. 

"The  five  sections  next  following  apply  to  the  Province  of 
Nova  Scotia,  but  shall  not  extend  to  any  hypothecation  or  agree- 
ment in  writing  entered  into  for  money  advanced  upon  the  bot- 
tom of  a  ship  or  vessel,  her  cargo  or  freight." — E.  S.  Can.,  ch. 
127,  §  12. 

"Any  person  may  stipulate  and  agree  in  writing  for  any  rate 
of  interest  not  exceeding  seven  per  centum  per  aniuim,  for  the 
loan  or  forbearance  of  money  to  be  secured  on. real  estate  or 


INTEREST   STATUTES.  313 

chattels  real ;  and  any  person  may  stipulate  in  writing  for  or 
may  receive  in  advance  any  rate  of  interest  not  exceeding  ten 
per  centum  per  animm,  whenever  the  security  for  the  payment 
of  the  money  consists  only  of  personal  property  or  the  personal 
responsibility  of  the  person  to  whom  forbearance  is  given,  or 
of  others. "~i2.  S.  Can.,  cli.  127,  §  13. 

"In  any  action  brought  on  any  contract  whatsoever,  in  which 
there  is,  directly  or  indirectl}^,  taken  or  reserved  a  rate  of  inter- 
est exceeding  that  authorized  in  the  next  preceding  section,  the 
defendant  may,  the  same  being  duly  pleaded,  as  in  other  cases, 
prove  such  excessive  interest,  and  it  shall  be  deducted  from  the 
amount  due  on  such  contract." — R.  S.  Can.,  ch.  127,  §  14. 

"No  person  shall,  upon  any  contract  or  security,  made  or  en- 
tered into,  given  or  taken  before  the  twenty-third  day  of  May, 
one  thousand  eight  hundred  and  seventy-three,  take,  directly  or 
indirectly,  for  the  loan  of  moneys  or  goods,  above  the  rate  of 
six  per  centum  per  annum,  and  every  such  contract  and  security 
whereby  a  greater  rate  of  interest  is  reserved  shall  be  void  ;  and 
every  person  who  takes  or  receives,  upon  any  such  contract  or 
security,  a  greater  rate,  shall  incur  a  penalty  equal  to  treble  the 
value  of  the  moneys  or  goods  in  such  contract  or  security  con- 
tracted for  or  secured;  but  no  prosecution  for  any  such  penalty 
shall  be  commenced  except  within  twelve  months  from  the  com- 
mission of  the  offence." — R.  S.  Can.,  ch.  127,  §  15. 

"Nothing  in  the  three  sections  next  preceding  shall  Jipply  to 
any  chartered  bank." — R.  S.  Can.,  ch.  127,  §  16. 

"Any  person  may  contract  for  the  loan  or  hire  of  grain  or 
live  stock,  upon  halves  or  otherwise,  upon  the  lender  taking 
upon  himself  all  risk  of  such  stock  ;  but  if  it  appears  that  the 
same,  or  any  part  thereof,  perished  or  was  lost  through  the  Avil- 
ful  neglect  of  the  borrower,  he  shall  make  good  to  the  lender 
the  full  value  thereof." — R.  S.  Can.,  ch.  127,  §  17. 

NEW  BRUNSWICK. 

"The  five  sections  next  following  apply  to  the  Province  of 
New  Brunswick  with  respect  to, — 

"(a)     Banks  which  are  not  subject  to  'T//e  Bank  Act;' 

"(&)  Other  incorporated  companies,  but  subject  to  any 
special  provision  in  any  other  Act ;  and  — 

"(c)  Contracts  made  between  the  thirteenth  day  of  April 
in  the  year  one  thousand  eight  hundred  and  fifty-nine,  and  the 
eighth  day  of  April,  in  the  year  one  thousand  eight  hundred 
and  seventy-five."— i?.  S.  Can.,  ch.  127,  §  18. 

"No  person  shall,  directly  or  indirectly,  receive  on  any  con- 


314  THE    LAW    OF  INTEREST. 

tract  for  tho  loan  of  an}'  money  or  goods,  more  than  six  dollars 
for  tlio  forbearance  of  one  hundred  dollars  for  one  year,  and 
after  that  rate  for  a  greater  or  lesser  sum,  and  a  longer  or  shortei 
time."— A\  -6\  Ccm.,  ch.  127,  §  19. 

"No  deed  or  contract  for  payment  of  any  money  loaned,  or 
for  the  forbearance  of  anything  undertaken,  upon  or  by  which 
more  than  such  rate  of  interest  is  reserved  or  received,  shall 
be  void  by  reason  thereof." — R.  S.  Can.,  ch.  127,  §  20. 

"In  any  action  brought  on  any  contract  whatsoever,  in  which 
there  is,  directly  or  indirectly,  taken  or  reserved  a  rate  of  inter- 
est exceeding  six  per  centum  per  annum,  the  defendant,  or  his 
attorney,  may,  under  the  general  issue,  with  notice  of  defence 
as  in  otiier  cases,  prove  such  excessive  interest,  and  it  shall  be 
deducted  from  the  amount  due  on  such  contract." — li.  S.  Can., 
ch.  127,  §  21. 

"Every  bank  not  subject  to '■The  Bank  Act,'  which,  upon  any 
such  deed  or  contract,  receives  or  reserves,  by  means  of  any 
loan,  bargain,  exchange  or  transfer  of  any  money  or  goods,  or 
by  any  deceitful  means,  for  the  forbearing  or  giving  day  of  pay- 
ment beyond  a  year,  of  its  money  or  goods,  more  than  six  dol- 
lars for  one  hundred  dollars  for  one  year,  and  after  that  rate  for 
a  greater  or  lesser  sum  and  longer  or  shorter  time,  shall  incur  a 
penalty  ecpial  to  the  value  of  the  principal  sum  or  goods  so 
loaned,  bargained,  exchanged  or  transferred,  and  all  interest 
and  other  profits  accruing  therefrom  ;  and  such  penalty  may  1)8 
recovered  by  action  in  any  court  of  record  in  the  county  in  which 
the  offence  was  committed,  —  which  action  shall  be  brought 
within  twelve  months  from  the  time  of  sucli  offence  and  not 
afterwards  ;  and  one  moiety  of  such  penalty  shall  belong  to  Her 
Majesty  for  the  public  uses  of  Canada,  and  the  other  moiety  to 
the  person  who  sues  for  the  same." — li.  S.  Can.,  ch.  127,  §  22. 

"Nothing  in  the  four  sections  next  preceding,  shall  apply  to 
bottomry  bonds  or  contracts  on  the  bottom  of  any  vessel,  dam- 
ages on  protested  bills,  allowed  by  law,  penalties  incurred  for 
the  non-fulfilment  of  any  contract,  if  such  penalties  are  mutually 
binding,  and  contracts  for  the  loan  or  hire  of  any  grain,  cattle, 
or  live  stock,  let  out  as  the  parlies  agree,  if  the  lender  takes 
the  risk  of  casualties  upon  himself, — in  which  case  the  borrower 
shall  not  avail  hin'.self  of  any  loss  suffered  thi'ongh  his  wilful 
neglect,  or  any  voluntarv  damage  which  is  committed  by  him." 
—li.  6'.  Can.,  ch.  127,  §  23. 

15UITISII    COLUMBIA. 

"The  three  sections  next  following  apply  to  the  rrovince  of 
British  Columbia." — Ji.  S.  Can.,  c/i.  127,  §  24. 


INTEREST   STATUTES.  315 

"In  all  cases  where  interest  is  chargeable  or  recoverable  by 
law  or  by  any  contract  expressed  or  implied,  or  npou  any  judg- 
ment of  any  court  in  British  Columbia,  if  the  rate  of  interest 
has  not  been  agreed  upon  in  writing,  such  rate  shall  be  six  per 
centum  per  annum." — R.  S.  Can.,  di.  127,  §  25. 

"In  all  cases  in  which  judgment  is  recovered  upon  any  con- 
tract in  writing  in  or  by  which  interest  at  a  higher  rate  than  six 
per  centum  per  annum  has  been  agreed  to  be  paid,  the  amount 
awarded  by  such  judgment  shall  bear  interest  at  the  rate  agreed 
upon,  not  however  exceeding  twelve  per  centum  per  annum." 
—R.  S.  Can.,  ch.  127,  §  26. 

"The  provisions  of  the  two  sections  next  preceding  shall  not 
extend  to  contracts  entered  into  before  the  second  day  of  June, 
one  thousand  eight  hundred  and  eighty-six." — R.  S.  Can.,  ch. 
127,  §  27. 

PRINCE    EDWARD   ISLAND. 

"The  following  provisions  apply  to  the  Province  of  Prince 
Edward  Island."— 7v'.  S.  Can.,  ch.  127,  §  28. 

"No  person  shall  recover,  in  any  court,  more  than  six  per 
centum  per  annum  interest  on  any  account,  contract  or  agree- 
ment, unless  it  appears  to  the  court  that  a  higher  rate  of  inter- 
est was  agreed  to  in  writing  between  the  parties." — R.  S.  Can., 
ch.  127,  §  29. 

"Nothing  herein  shall  prejudice  or  affect  the  rights  or  reme- 
dies of  any  person,  or  diminish  or  alter  the  liabilities  of  any 
person,  in  respect  of  any  act  done  previously  to  the  fifteenth 
day  of  April,  in  the  year  one  thousand  eight  hundred  and  sev- 
enty, and  if  interest  was  payable  at  that  date  upon  any  contract, 
express  or  implied,  for  the  payment  of  the  legal  or  current  rate 
of  interest  or  upon  any  debt  or  sum  of  money  by  any  rule  of 
law,  the  same  shall  be  recoverable  as  if  the  provisions  of  the 
next  preceding  section  had  not  been  enacted." — R.  S.  Can.,  ch. 
127,  §  30. 

UNITED   STATES. 

"  Upon  all  bonds,  on  which  suits  are  brought  for  the  recovery 
of  duties,  interest  shall  be  allowed,  at  the  rate  of  six  per 
centum  a  year,  from  the  time  when  said  bonds  became  due." — 
Rev.  St.,  §963. 

"  In  all  suits  for  balances  due  to  the  Post-OfRce  Department, 
interest  thereon  shall  be  recovered,  from  the  time  of  the  default, 
at  the  rate  of  six  per  centum  a  year." — Rev.  St.,  §  964, 

"In  suits  upon  debentures,  issued  by  the  collectors  of  the 
customs  under  any  act  for  the  collection  of  duties,  interest  shall 


31G  THE    LAW    OF    INTEREST. 

be  allowed  at  the  rate  of  six  per  cenium  per  annum,  from  the 
time  ■when  such  debenture  became  due  and  payable." — liev.  St., 
§116,"). 

"Interest  shall  be  allowed  on  all  judgments  in  civil  causes, 
recovered  in  a  c'rcuit  or  district  court,  and  may  be  levied  by 
the  marshal  under  process  of  execution  issued  thereon,  in  all 
cases  where,  by  the  law  of  the  State  in  which  such  court  is  hold, 
interest  maybe  levied  under  process  of  execution  on  judgments 
recovered  iuthe  courts  of  such  Slate  ;  and  it  shall  be  calculated 
from  the  date  of  the  judgment,  at  such  rate  as  is  allowed  by 
law  on  judgments  recovered  in  the  courts  of  such  State." — Rev. 
St.,  §9GG. 

"  In  cases  where  the  judgment  appealed  from  is  in  favor  of 
the  claimant,  and  the  same  is  aflirmed  by  the  Supreme  Court, 
interest  thereon  at  the  rate  of  five  per  centum  shall  be  allowed 
from  the  date  of  its  presentation  to  the  Secretary  of  the  Treas- 
ury for  payment  as  aforesaid,  hut  no  interest  shall  be  allowed 
subsequent  to  the  aflirmance,  unless  presented  for  payment  to 
the  Secretary  of  the  Treasury  as  aforesaid." — Bev.  St.,  §  1090. 

"  jS'o  interest  shall  be  allowed  on  any  claim  up  to  tlie  time  of 
the  rendition  of  judgment  thereon  by  the  Court  of  Claims,  unless 
upon  a  contract  expressly  stipulating  for  the  payment  of  in- 
terest."—it!eu.  St.,  §  1091. 

If  internal  revenue  taxes  are  not  paid  at  the  end  of  ten 
days  after  demand  of  payment  by  the  collector,  they  shall  be  in- 
creased five  per  cent  and  shall  bear  interest  at  the  rate  of  one 
per  cent  a  month. — liev.  St.,  §3184.  The  next  section  of  the 
statute  sa3's  that  in  such  cases  no  interest  for  a  fraction  of  a 
month  shall  be  demanded. 

Revenue  stamps  can  be  affixed  to  documents  after  the  time 
the}''  ought  to  have  been  affixed  by  paying  six  per  cent  interest 
on  the  amount  of  the  tax  from  the  time  the  stamps  should  have 
been  to  the  time  they  were  affixed. — Jiev.  St.,  §  3422. 

'•  Any  association  may  take,  receive,  resen'C,  and  charge  on 
any  loan  or  discount  made,  or  upon  any  note,  bill  of  exchange, 
or  other  evidence  of  debt,  interest  at  the  rate  allowed  l-y  the 
laws  of  the  State,  Territory,  or  district  where  the  bank  is  located, 
anel  no  more,  except  that  where  by  the  laws  of  any  State  a  dif- 
ferent rate  is  limited  for  banks  of  issue  organized  urder  State 
laws,  the  rate  so  limited  shall  be  allowed  for  associations  or- 
ganized or  existing  in  any  such  State  under  this  Title. ^  ^Vheu 
no  rate  is  fixed  by  the  laws  of  the  State,  or  Territor3%  or  dis- 
trict, the  bank  may  take,  receive,  reserve,  or  charge  a  rate  not 
exceeding  seven  per  centum,  and  such  interest  may  be  taken  in 

'  rertainiDf?  to  national  banks. 


INTEREST    STATUTES.  317 

advance,  reckoning  the  days  for  which  the  note,  bill,  or  other 
evidence  of  debt  has  to  run.  And  the  purchase,  discount,  or 
sale  of  a  bona-fide  bill  of  exchange,  payable  at  another  place 
than  the  place  of  such  purchase,  discount,  or  sale,  at  not  more 
than  the  current  rate  of  exchange  for  sight  drafts  in  addition  to 
the  interest,  shall  not  be  considered  as  taking  or  receiving  a 
greater  rate  of  interest." — Rev.  St.,  §  5197. 

"The  taking,  receiving,  reserving,  or  charging  a  rate  of  in- 
terest greater  than  is  allowed  by  the  preceding  section,  when 
knowingly  done,  shall  be  deemed  a  forfeiture  of  the  entire  in- 
terest which  the  note,  bill,  or  other  evidence  of  debt  carries  with 
it,  or  which  has  been  agreed  to  be  paid  thereon.  In  case  the 
greater  rate  of  interest  has  been  paid,  the  person  by  whom  it 
has  been  paid,  or  his  legal  representatives,  may  recover  back, 
in  an  action  in  the  nature  of  an  action  of  debt,  twice  the  amount 
of  the  interest  thus  paid  from  the  association  taking  or  receiv- 
ing the  same ;  provided  such  action  is  commenced  Avithiu  two 
years  from  the  time  the  usurious  trc-nsaction  occurred." — Rev. 
St.,  §  5198. 

ALABAMA. 

"  Every  bill  of  exchange,  note,  bond,  or  instrument  of  any 
description,  whatever  may  be  its  form  or  device,  issued  with 
the  intent  to  circulate  as  money,  Avithout  authority  of  law,  is 
an  absolute,  unconditional  promise  of  the  association  or  person 
putting  such  bill,  note,  or  other  instrument  in  circulation,  and 
may  be  sued  on  by  the  holder  thereof,  without  transfer  or 
assignment,  and  without  demand,  protest,  or  notice,  and  the 
amount  thereof  recovered,  with  interest  thereon  at  the  rate  of 
fifty  per  cent,  per  annum  from  the  date  thereof,  or  from  the 
time  the  same  was  put  in  circulation." — Code.,  §  1193. 

"The  rate  of  interest  upon  the  loan  or  forbearance  of  money, 
goods,  or  things  in  action,  is  eight  dollars  upon  one  hundred 
dollars  for  one  year  ;  and  at  that  rate  for  a  greater  or  less  sum, 
or  a  longer  or  shorter  time." — Code.,  §  1750. 

"  All  contracts,  express  or  implied,  for  the  payment  of 
money,  or  other  thing,  or  for  the  performance  of  any  act  or 
duty,  bear  interest  from  the  day  such  money,  or  tiling,  estimat- 
ing it  at  its  money  value,  should  have  been  paid,  or  such  act, 
estimating  the  compensation  therefor  in  money,  performed." — 
Code,  §1751. 

"Judgments  and  decrees  for  the  payment  of  money,  other 
than  costs,  bear  interest  from  the  day  of  rendition." — Code, 
§1752. 

"  When  partial  payments  are  made,  the  interest  due  is  first 


318  THE    LAAV    OF    INTEREST. 

to  be  paid,  and  the  balaucc  applied  to  the  paj'mcnt  of  the  priiv 
cipal." — Code^  §  1753. 

"  All  contracts  for  the  payment  of  interest  upon  the  loan,  or 
forbearance  of  goods,  money,  things  in  action,  or  upon  any  con- 
tract whatever,  at  a  higher  rate  than  is  prescribed  in  this  chap- 
ter, aie  usurious  and  cannot  be  enforced,  except  as  to  the 
principal ;  and  if  any  interest  has  been  paid,  the  same  must  be 
deducted  from  the  principal,  and  judgment  rendered  for  the 
balance  only." — Code^   §  1754. 

"All  change  bills  and  notes  for  a  sum  not  exceeding  one 
dollar,  issued  or  circulated  in  this  state  without  authority  of 
law,  bear  interest  at  the  rate  of  one  hundred  per  cent,  per 
annum,  from  the  day  of  their  date,  or  time  of  issue,  or  circula- 
tion ;  and  maybe  sued  by  the  holder  thereof,  without  regard  to 
the  person  to  whom  the  same  are  payable,  and  a  recovery  had 
against  the  person  issuing  or  giving  circulation  to  the  same." — 
Code,  §  1755. 

"  Damages  on  protest  for  non-payment  are  in  place  of  all 
charges  except  costs  of  protest  incurred  previous  to,  and  at  the 
time  of  giving  notice  of  non-payment,  but  the  holder  may  re- 
cover legal  interest  upon  the  aggregate  amount  of  the  principal 
sum  specified  in  such  bill,  and  of  the  damages  thereon,  from 
the  time  at  whicli  payment  of  tiie  principal  sum  has  been  de- 
manded, and  co-^ts  of  protest." — Code,   §  1772. 

"When  a  bill  of  exchange  is  protested  for  non-acceptance, 
the  same  late  of  damages  is  allowed  as  in  the  case  of  a  protest 
for  non-payment ;  and  such  damages  are  in  the  place  of  all 
charges,  except  costs  of  protest,  incurred  previous  to,  and  at 
the  time  of  giving  notice  of  non-acceptance  ,  but  the  holier  is 
entitled  to  recover  legal  interest,  exclusive  of  the  damages,  upon 
the  amount  of  the  principal  sum,  from  the  time  when  the  same 
Avould  have  become  payable,  if  accepted,  interest  on  the  dam- 
ages from  the  demand  of  acceptance,  and  costs  of  protest." — 
Code,  §  1775. 

"  If  ou  such  sale  [of  collateral  securities  or  pledges],  after 
paying  the  costs  and  expenses  thereof,  and  the  debt,  there  re- 
mains any  balance  of  the  proceeds  of  sale,  the  fame  must  be 
paid  to  the  debtor  or  person  from  wliom  such  security  was  taken 
or  received,  or  to  his  assignee  or  transferee.  If  on  demand, 
after  receiving  the  proceeds  of  sale,  the  creditor,  or  his  trans- 
feree, or  the  personal  representative  of  the  creditor  or  trans- 
feree, fail  or  neglect  to  pay  such  balance,  the  same  shall  bear 
interest  at  the  rate  of  five  per  cent,  per  month." — Code,  §  1787. 

"  If  any  executor  or  administrator  uses  any  of  the  funds  of 
the  estate  for  his  own  benefit,  he  is  accountable  for  any  profit 


INTEREST   STATUTES.  319 

made  thereon,  or  legal  interest ;  and  in  making  out  his  account 
for  a  settlement,  he  must  state  the  sum  so  used,  the  time,  and 
the  profit  resulting  from  such  use,  if  over  legal  interest ;  or  he 
nmst  expressly  deny  on  oath  that  he  has  so  used  such  funds  ; 
and  any  party  interested  may  contest  the  same." — (Jode, 
§2142. 

"  All  contracts  made  with  guardians,  verbal  or  written,  for 
the  payment  of  money,  bear  compound  interest  after  maturity, 
if  not  otherwise  expressed ;  and  judgments  rendered  thereon 
also  bear  compound  interest." — Code^  §  2413. 

"In  all  actions  founded  on  any  instrument  of  writing,  ascer- 
taining the  plaintiff's  demand,  if  judgment  by  default,  nil  dicit, 
or  on  demurrer,  be  rendered  for  the  plaintiff,  such  judgment 
may  be  entered  up  by  the  clerk,  under  the  direction  of  the  court, 
without  the  intervention  of  a  jury ;  and  the  clerk  must  com- 
pute tlie  interest,  and,  in  case  of  a  bill  of  exchange,  the  dam- 
ages, if  any  be  due  thereon." — Code^  §2740. 

'•The  secretary  of  state  must  cause  to  be  printed,  in  the 
pamphlet  acts  of  each  session  of  the  general  assembly,  the  rate 
of  interest  of  each  state  and  territory  ;  and  such  publication 
must  be  received  as  presumptive  evidence  of  such  interest." — 
Code,  §  2791. 

"  Any  banker,  who  discounts  any  note,  bill  of  exchange,  or 
draft  at  a  higher  rate  of  inteiest  than  eight  per  cent,  per 
annum,  not  including  the  difference  of  exchange,  is  guilty  of  a 
misdemeanor." — Code,  §  4140. 

ARIZONA. 

"The  rale  of  interest  in  any  other  State,  territory  or  coun- 
try, is  presumed  to  be  the  same  as  that  established  by  law  in 
this  territory,  and  may  be  recovered  accordingly  without  alle- 
gation or  proof  of  the  rate  of  interest  in  such  other  state,  ter- 
ritory or  country,  unless  the  rate  of  interest  in  such  other  coun- 
try be  alleged  and  proved." — E.  S.  §  1876. 

"  When  there  is  no  express  agreement  fixing  a  different  rate 
of  interest,  interest  shall  be  allowed  at  the  rate  of  seven  per 
cent  per  annum  on  all  moneys  after  they  become  due  on  any 
bond,  bill,  promissory  note  or  other  instrument  in  writing,  or 
any  judgment  recovered  in  any  court  in  this  territory,  for 
money  lent,  for  money  due  on  any  settlement  of  accounts  from 
the  day  on  which  the  balance  is  ascertained  and  for  money  re- 
ceived for  the  use  of  another." — E.  S.  §  2161. 

"Parties  may  agree  in  writing  for  the  paj^ment  of  any  rate 
of  interest  whatever  on  inouey  due  or  to  become  due  on  any 


320  THE    LAW    OF    INTEREST. 

contract ;  any  judgment  rendered  on  sucli  contract  shall  con- 
form thereto,  and  shall  bear  the  rate  of  interest  agreed  upon 
by  the  parties,  and  which  shall  be  specified  in  the  judgment." — 
ll  S.  §  21G2. 

"  Every  pawnbroker  who  charges  or  receives  interest  at  the 
rate  of  more  than  four  per  cent  per  month,  or  who  by  charg- 
ing commission,  discount,  storage  or  other  charge,  or  by  com- 
pounding, increases  or  attempts  to  increase  such  interest,  is 
guilty  of  a  misdemeanor." — li.  S.,  Penal  Code,  §  558. 

ARKANSAS. 

"In  addition  to  the  damages  allowed  in  the  two  preceding 
sections'  to  the  holder  of  any  bill  of  exchange  protested  for 
non-payment  or  non-acceptance,  he  shall  be  entitled  to  costs 
of  protest  and  interest  at  the  rate  of  ten  per  centum  per  an- 
num on  the  amount  specified  in  the  bill,  from  the  date  of  the 
protest  until  the  amount  of  such  bill  shall  be  paid." — Dig.  of 
Stat.,  §  AGS. 

"II"  any  guardian  fail  to  loan  the  money  of  his  ward  on  hand, 
....  under  the  provisions  of  this  act,  he  shall  be  account- 
able for  the  interest  thereon." — Dig.  of  Stat.,  §  3513. 

"All  contracts  for  a  greater  rate  of  interest  than  ten  per 
centum  per  annum  shall  be  void  as  to  principal  and  interest, 
and  the  general  assembly  shall  prohibit  the  same  by  law,  l)ut 
when  no  rate  of  interest  is  agreed  upon,  the  rate  shall  be  six 
per  centum  per  annum." — Dig.  of  Stat.,  §  4732. 

"The  parties  to  any  contract,  whether  the  same  be  under 
seal  or  not,  may  agree  in  writing  for  the  payment  of  interest 
not  exceeding  ten  per  centum  per  annum  on  money  due  or  to 
become  due." — Dig.  of  Stat.,  §  4733. 

"  No  person  or  corporation  shall,  directly  or  indirectly,  take 
or  receive  in  money,  goods,  things  in  action,  or  any  other  val- 
uable thing,  any  greater  sum  or  value  for  the  loan  or  forbear- 
ance of  money  or  goods,  things  in  action,  or  anj^  other  valuable 
thing,  than  is  in  section  4733  prescribed." — Dig.  of  Stat.,  § 
4734. 

"  All  bonds,  bills,  notes,  assurances,  conveyances,  and  all 
other  contracts  or  securities  whatever,  whereupon  or  whereby 
there  shall  be  reserved,  taken  or  secured,  or  agreed  to  be 
taken  or  reserved,  any  greater  sum  or  greater  value  for  the  loan 
or  forljcarance  of  any  money,  goods,  things  in  action,  or  any 
other  valuable  thing,  than  is  prescribed  in  this  act  shall  be 
void." — Die/,  of  Stat.,  §  4735. 

"  It  shall  be  lawful  for  all  parties  loaning  money  in  this  state 

'  Certain  per  centum  forfeitures. 


INTEREST   STATUTES.  321 

to  reserve,  or  discount,  interest  upon  any  commercial  paper, 
mortgages  or  other  securities,  at  any  rate  of  interest  agreed 
upon  by  tlie  parties,  said  rate  of  interest  not  to  exceed  ten  per 
centum  per  annum,  whetlier  such  paper  or  securities  for  princi- 
pal or  interest  be  payable  in  this  state,  or  any  other  state,  king- 
dom or  country." — Dig.  of  Stat.,  §  4736. 

"  For  the  purpose  of  calculating  interest,  a  month  shall  be 
considered  the  twelfth  part  of  a  year,  and  as  consisting  of 
thirty  days  ;  and  interest  for  any  number  of  days  less  than  a 
month  shall  be  estimated  by  the  proportion  which  such  number 
of  days  shall  bear  to  thirty." — Dig.  of  Stat.,  §  4737, 

"In  calculating  interest,  where  partial  payments  may  have 
been  made,  the  interest  shall  be  calculated  to  the  time  when  the 
first  payment  shall  have  been  made,  and  such  payment  shall 
be  applied  to  the  payment  of  such  interest ;  and  if  such  pay- 
ment exceed  the  interest,  the  balance  shall  lie  applied  to  dimin- 
ish the  principal,  and  the  same  course  shall  be  observed  in  all 
subsequent  payments  ;  but  in  no  case  when  a  payment  shall 
fall  short  of  paying  the  interest  due  at  the  time  of  making  such 
payment  shall  the  balance  of  such  interest  be  added  to  the  prin- 
cipal."— Dig.  of  Stat.,  §  4738. 

'*■  Whenever  any  certain  interest  is  or  maj^  be  mentioned,  and 
no  period  of  time  is  stated  for  such  rate  of  mterest  to  lie  cal- 
culated, mterest  shall  be  calculated  at  the  rate  mentioned  by  the 
year,  in  the  same  manner  as  if  the  words  '  per  annum'  or  'by 
the  year'  had  been  added  to  such  rate." — Dig.  of  Stat.,  §  4739. 

"  Creditors  shall  be  allowed  to  receive  [interest]  at  the  rate 
of  six  per  cent,  per  annum  on  any  judgment  before  any  court  or 
magistrate  authorized  to  enter  up  the  same,  from  the  day  of 
signing  judgment  until  the  effects  are  sold,  or  satisfaction  be 
made." — Dig.  of  Stat.,  §  4740. 

"Judgments  or  decrees  upon  contracts  bearing  more  than 
six  per  cent,  interest  shall  bear  the  same  interest  as  may  be 
specified  in  such  contracts,  and  the  rate  of  interest  shall  be  ex- 
pressed in  all  such  judgments  and  decrees,  and  all  other  judg- 
ments and  decrees  shall  bear  interest  at  the  rate  of  six  per  cent. 
per  annum,  until  satisfaction  is  made  as  aforesaid." — Dig.  of 
Stat.,  §  4741. 

"  If  default  be  made  in  the  regular  payment  of  interest  due 
upon  money  loaned,  or  for  lands  sold  by  any  conmion  school 
commissioner  or  township  treasurer,  or  in  the  payment  of  the 
principal,  interest  at  the  rate  of  ten  per  cent,  per  annum  shall 
be  chaiged  upon  the  principal  and  interest  from  the  day  of  de- 
fault, which  shall  be  included  in  the  assessment  of  damages,  or 
in  the  judgment,  in  suits  or  actions  brought  upon  the  obligation 
21 


322  THE    LAW    OF    INTEREST. 

to  enforce  pavmcnt  thereof ;  and  interest,  as  aforesaid,  maj^  be 
recovered  in  ueiions  brought  to  recover  interest  only." — Dig.  of 
Sua.,  §  (5130. 

"  AV'hen  any  bond,  bill  or  note  for  the  payment  of  money  or 
delivery  of  property  shall  not  be  paid  by  the  principal  debtor, 
according  to  the  tenor  thereof,  and  such  bond,  bill  or  note,  or 
any  part  thereof,  shall  be  paid  by  the  surety,  the  princii)al 
debtor  shall  refund  to  the  surety  the  amount  or  value,  Avith  in- 
terest thereou  at  the  rate  of  ten  per  centum  per  annum  from 
the  time  of  such  payment." — Dig.  of  Stat.,  §  6401. 

"  Wlien  such  payment  by  a  surety  shall  be  made  in  mone}', 
such  surety  may  recover  the  same,  with  interest,  in  an  action 
for  so  much  money  paid  to  the  use  of  the  defendant ;  and  when 
payment  is  made  in  property,  he  may  recover  the  value,  with 
the  interest,  in  an  action  for  so  much  property  sold  to  the  de- 
fendant."—Z)/^/.  of  Stat.,  §  G402. 

Taxes  bear  interest  at  ten  per  cent  under  certain  conditions. 
— Ads  0/1885,  ch.  71. 

"  Every  lien  created  or  arising  by  mortgage,  deed  of  trust 
or  otherwise,  as  real  or  personal  property,  to  secure  the  pay- 
ment of  a  contract  for  a  greater  rate  of  interest  than  ten  per 
centum  per  annum,  either  directly  or  indirectly,  and  every  con- 
veyance made  in  furtherance  of  any  such  lien  is  void  ;  and  ev- 
ery such  lien  or  conveyance  may  be  cancelled  and  annulled  at 
the  suit  of  the  maker  of  such  usurious  contract,  or  his  ven- 
dees, assigns  or  creditors.  The  maker  of  a  usurious  contract 
may  by  suit  in  equity  against  all  parties  asserting  rights  under 
the  same,  have  such  contract  and  any  mortgage,  pledge  or  other 
lien,  or  conveyance  executed  to  secure  the  performance  of  the 
same,  annulled  and  cancelled,  and  any  property,  real  or  personal, 
embraced  within  the  terms  of  said  lien  or  conveyance,  deliv- 
ered up  if  in  possession  of  any  of  the  defendants  in  the  ac- 
tion, and  if  the  same  be  in  the  possession  of  the  plaintiff,  pro- 
vision shall  be  made  in  the  decree  in  the  case  removing  the 
cloud  of  such  usurious  lien,  and  conversances  made  in  further- 
ance thereof,  from  the  title  to  such  property.  And  any  person 
who  may  have  acquired  the  title  to,  or  an  interest  in,  or  lien 
upon  such  property  by  purchase  from  the  makers  of  such  usu- 
rious contract,  or  by  assignment  or  by  sale  under  judicial  j)roc- 
ess,  mortgage  or  otherwise,  either  before  or  after  the  making  of 
the  usurious  contract,  may  luring  his  suit  in  equity  against  the 
parties  to  such  usurious  contract,  and  any  one  claiming  title  to 
such  property  l)y  virtue  of  such  usurious  contract,  or  may  in- 
tervene in  any  suit  brought  to  enforce  such  lien,  or  to  obtain 
possession  of  such  property  under  any  title  growing  out  of  such 


INTEREST   STATUTES.  323 

usurious  contract,  and  shall  by  proper  decree  have  such  mort- 
2;age,  pledge  or  other  lien,  or  conveyance  made  in  furtherance 
tliereof,  cancelled  and  annulled  in  so  far  as  the  same  is  in  con- 
flict with  the  rights  of  the  plaintiff  in  the  action."— ^c<s  of 
1887,  c7i.  39,  §  1. 

"  That  any  creditor  whose  debtor  has  given  a  lien  by  mort- 
gage, pledge  or  otherwise,  on  real  or  personal  property,  sub- 
ject to  execution  to  secure  the  payment  of  a  usurious  contract, 
may  bring  his  suit  in  equity  against  the  parties  to  such  usurious 
contract,  and  recover  judgment  for  his  debt  against  the  debtor, 
and  a  decree  cancelling  and  annulling  such  usurious  lien,  and 
directing  the  sale  of  the  property  to  satisfy  the  plaintift's  judg- 
ment and  costs,  and  any  surplus  that  may  remain  after  satisfy- 
ing the  plaintiff's  judgment,  shall  be  paid  to  the  debtor." — 
Acts  of  1887,  ch.  39,  §  2. 

"  That  neither  the  maker  of  a  usurious  contract  nor  his  ven- 
dees, assigns  or  creditors,  or  any  other  person  who  may  have 
or  claim  an  interest  in  any  property  embraced  within  the  terms 
of  said  usurious  contract,  shall  be  required  to  tender  or  pay 
any  part  of  the  usurious  debt  or  interest  as  a  condition  of  hav- 
ing such  contract,  and  any  conveyance,  mortgage,  pledge  or 
other  lien  given  to  secure  its  payment  or  executed  in  further- 
ance thereof,  enjoined,  cancelled  and  annulled,  and  any  rule  of 
law,  equity  or  practice  to  the  contrary  is  hereby  abrogated." — 
.ids  f/ 1887,  c/t.  39,  §  3. 

"That  this  act  shall  apply  to  all  usurious  contracts  and  se- 
curities, whether  executed  before  or  after  its  passage,  and  shall 
be  in  force  from  and  after  its  passage." — Acts  o/1887,  cli.  39, 
§4. 

CALIFORNIA. 

"If  the  debt  for  which  the  mortgage,  lien,  or  incumbrance 
is  held  is  not  all  due,  so  soon  as  sufficient  of  the  property  lias 
been  sold  to  pay  the  amount  due,  with  costs,  the  sale  must 
cease;  and  afterwards,  as  often  as  more  becomes  due,  for  prin- 
cipal or  interest,  the  court  may,  on  motion,  order  more  to  be 
sold.  But  if  the  property  cannot  be  sold  in  portions,  without 
injury  to  the  parties,  the  whole  may  be  ordered  to  be  sold  in 
the  first  instance,  and  the  entire  debt  and  costs  paid,  there  be- 
ing a  rebate  of  interest  where  such  rebate  is  proper." — Code  of 
Civil  Procedure^  §  728. 

"The  clerk  must  inclnde  in  the  judgment  entered  up  by  him, 
any  interest  on  the  verdict  or  decision  of  the  court,  from  the 
time  it  was  rendered  or  made." — Code  of  Civil  Procedure,  § 
1035. 


324  THE    LAW    OF    INTEREST. 

"In  case  of  n,  bequest  of  the  interest  or  income  of  a  certain 
sum  or  fund,  the  income  accrues  from  tiie  testator's  death." 
— Cicil  Code,  §  loGG. 

"Legacies  bear  interest  from  the  time  when  the}- are  due  and 
payable,  except  that  legacies  for  maintenance,  or  to  the  testa- 
tor's widow,  bear  interest  from  tiie  testator's  decease."^ — Civil 
Code,  §  13G9. 

Money  paid  on  a  claim,  if  not  specially  stated  what  its  pay- 
ment is  to  be  applied  to,  will  be  first  api)lied  to  the  payment 
"of  interest  due  at  the  time  of  the  performance." —  Civil  Code, 

'•An  offer  of  payment  or  other  performance,  duly  made, 
though  the  title  to  the  thing  ollered  be  not  transferred  to  the 
cretlitor,  stops  the  running  of  interest  on  the  obligation,  and 
has  the  same  effect  upon  all  its  incidents  as  a  performance 
thereof."— Ca'<7  Code,  §  1504. 

"Whenever  a  loan  of  money  is  made,  it  is  presumed  to  be 
made  upon  interest,  unless  it  is  otherwise  expressly  stipulated 
at  the  time  in  writing." — Civil  Code,  §  1914. 

"Interest  is  the  compensation  allowed  by  law  or  fixed  by  the 
parties  fur  the  use,  or  forbearance,  or  detention  of  money." — 
Civil  Code,  §  1915. 

"When  a  rate  of  interest  is  prescribed  by  a  law  or  contract, 
without  specifying  the  period  of  time  by  which  such  rate  is  to 
be  calculated,  it  is  to  be  deemed  an  annual  rate." — Civil  Code, 
§  1916. 

"Unless  there  is  an  express  contract  in  writing,  fixing  a 
dift'erent  rate,  interest  is  paj-able  on  all  moneys  at  the  rate  of 
seven  per  cent  per  annum  after  the}-  become  due,  on  any  in- 
strument of  writing,  except  a  judgment,  and  on  moneys  lent, 
or  due  on  any  settlement  of  account,  from  the  day  on  which 
the  balance  is  ascertained,  and  on  moneys  received  to  the  use 
of  another  and  detained  from  him.  In  the  computation  of  in- 
terest for  a  period  less  than  a  j'ear,  three  hundred  and  sixty 
days  are  deemed  to  constitute  a  year." — Civil  Code,   §  1917. 

"Parties  may  agree  in  writing  for  the  payment  of  any  rate 
of  interest,  and  it  shall  be  allowed,  according  to  the  terms  of 
the  agreement,  until  the  entry  of  judgment." — Civil  Code,  § 
1918. 

"The  parties  may,  in  any  contract  in  writing  whereby  anj' 
debt  is  secured  to  be  paid,  agree  that  if  the  interest  on  such 
debt  is  not  punctually  paid  it  shall  become  a  part  of  the  prin- 

'  Section  1370  says  that  this  section  is  coutroUod  by  the  testator's 
expressed  intention. 


INTEREST    STATUTES.  325 

cipal,  and  thereafter  bear  the  same  rate  of  interest  as  the 
priucipal  deU."— Civil  Code,  §  1919, 

"Interest  is  payable  on  jndgments  recovered  in  the  conrts 
of  this  state  at  the  rate  of  seven  per  cent  per  annum,  and  no 
greater  rate,  but  such  interest  must  not  be  compounded  in  any 
manner  or  form." — Civil  Code,  §  1920. 

"A  trustee  who  uses  or  disposes  of  the  trust  property,  con- 
trary to  section  2229,  may,  at  the  option  of  the  beneficiary,  be 
required  to  account  for  all  profits  so  made,  or  to  pay  the  value 
of  its  use,  and,  if  he  has  disposed  thereof,  to  replace  it,  with 
its  fruits,  or  to  account  for  its  proceeds,  with  interest." — Civil 
Code,  §  2237. 

"If  a  trustee  omits  to  invest  the  trust  moneys  [as  fast  as  he 
collects  a  sufficient  amount],  he  must  pay  simple  interest  thereon 
if  such  omission  is  negligence  merely,  and  a  compound  interest 
if  it  is  vfimnV— Civil  Code,  §  2262. 

"Upon  a  contract  of  bottomry,  the  parties  may  lawfully 
stipulate  for  a  rate  of  interest  higher  than  that  allowed  by  the 
law  upon  other  contracts.  But  a  competent  court  may  reduce 
the  rate  stipulated  when  it  appears  unjustifiable  and  exorbitant. "^ 
—Civil  Code,  §  3022. 

"From  the  time  of  notice  of  dishonor  and  demand  of  pay- 
ment, lawful  interest  must  be  allowed  upon  the  aggregate 
amount  of  the  principal  sum  specified  in  the  bill,  and  the  dam- 
ages mentioned  in  the  preceding  section," — Civil  Code,   §  3236. 

"Every  person  who  is  entitled  to  recover  damages  certain, 
or  capable  of  being  made  certain  by  calculation,  and  the  right 
to  recover  which  is  vested  in  him  upon  a  particular  day,  is  en- 
titled also  to  recover  interest  tliereon  from  that  day,  except 
during  such  time  as  the  debtor  is  prevented  by  law,  or  by  the 
act  of  the  creditor  from  paying  the  debt." — Civil  Code,  §  3287. 

"In  an  action  for  the  breach  of  an  obligation  not  arising 
from  contract,  and  in  every  case  of  oppression,  fraud,  or  malice, 
interest  may  be  given,  in  the  discretion  of  the  jury." — Civil 
Code,  §  3288. 

"Any  legal  rate  of  interest  stipulated  by  a  contract  remains 
chargeable  after  a  breach  thereof,  as  before,  until  the  contract 
is  superseded  by  a  verdict  or  other  new  obligation." — Civil  Code, 
§  3289, 

"Accepting  payment  of  the  whole  principal,  as  such,  waives 
all  claim  to  interest." — Civil  Code,  §  3290. 

"Interest  at  the  rate  of  two  per  cent  per  month  must  be  col- 
lected on  .  ,  delinquent  taxes  from  the  time  they  were  first 
delinquent  until  paid." — Political  Code,  §  3803. 

'  Bj'  section  3039,  this  applies  also  to  loans  on  respondentia. 


32G  THE    LAW    OF    INTEREST. 

"When  any  warrant  is  presented  to  the  [connty]  treasurer  for 
payment  and  the  same  is  not  paid  for  want  of  funds,  the  treas- 
urer must  indorse  thereon,  'not  paid  for  want  of  funds,'  annex- 
in«T  the  date  of  presentation,  and  sign  his  name  thereto  ;  and 
from  that  time  until  paid  the  warrant  bears  seven  per  cent  per 
annum  interest." — Political  Code,  §  4148. 


COLORADO. 

"Debts  not  due  [in  an  assignment  for  the  benefit  of  creditors] 
may  becLaimed,  but  if  the  same  arc  not  bearing  interest,  a  suit- 
able rebate  shall  be  made.  Interest  shall  be  computed  to  t!ie 
date  of  the  assignment,  and  not  afterward." — Mill's  St.,  §  187. 

County  bonds  bear  "interest  at  the  rate  of  not  exceeding  ten 
per  cent  per  annum  from  their  date  until  paid,  said  interest  being 
payable  on  the  first  day  of  April  of  each  year,"  etc. — Mill's  St., 
§  93.5. 

".State  warrants  shall  bear  interest  at  the  rate  of  six  (6)  per 
cent  per  annum  from  the  date  of  their  presentation  for  payment," 
but  compound  interest  shall  not  be  paid. — Mill's  St.,  §§  1814, 
1850. 

"The  [state]  treasurer  sh.all  keep  a  record  of  the  number  and 
amount  of  the  warrants  so  presented  and  indorsed  for  non-pay- 
ment, and  when  there  are  funds  in  the  treasury  for  the  i)ayment 
to  an  account  [of  an  amount]  sufficient  to  render  it  advisable, 
he  shall  give  notice  to  what  number  of  warrants  the  fluids  will 
extend  and  which  he  will  pay,  by  the  insertion  in  a  newspaper 
printed  at  the  seat  of  government.  At  the  expiration  of  thirty 
days  from  the  day  of  the  last  insertion,  interest  on  the  warrants 
so  named  as  being  payable  shall  cease.  When  interest  is  paid 
upon  the  warrants,  the  amount  shall  be  indorsed  upon  the  war- 
rant and  be  signed  by  the  party  receiving  it." — Mill's  St.,§  1852. 

"The  legal  rate  of  interest  on  the  forbearance  or  loan  of  any 
money  when  there  is  no  agreement  lietween  the  parlies,  as  spec- 
ified in  section  three  of  this  act,i  shall  be  at  the  rate  of  eight  per 
centum  per  annum." — Mill's  St.,  §  2251. 

•'Creditors  slu\ll  be  allowed  to  receive  interest  when  tliere  is 
no  agreement  as  to  the  rate  thereof,  at  the  rate  often  per  centum 
per  annum,  for  all  moneys  after  they  become  due,  on  any  bond, 
liill,  promissory  note  or  other  instrument  of  writing,  or  any  judg- 
ment recovered  before  any  court  or  magistrate  authorized  to  en- 
ter up  the  same  within  this  state,  from  the  day  of  entering  up 
said  judgment  until  satisfaction  tliereof  be  made  ;  also  on  money 
due  on  mutual  settlement  of  accounts  from  the  date  of  such  set- 

•  §  2253  beyond. 


INTEREST    STATUTES.  327 

tlemcnt  on  money  due  on  account  from  tlic  elate  when  tlie  same 
became  due,  and  on  money  received  to  the  use  of  another  and 
detained  without  the  owner's  knowledge." — Mill's  St.^  §  2252. 

"Tlie  parties  to  any  bond,  bill  or  promissory  note,  or  other 
instrument  o-f  writing,  may  stipulate  therein  for  the  payment 
of  a  greater  or  higher  rate  of  interest  than  eight  per  centum  per 
annum,  and  any  such  stipulation  may  be  enforced  in  any  court 
of  competent  jurisdiction  in  the  state." — Mill's  iSt.,  §  2253. 

"County  orders  and  warrants,  town  and  city  orders  and  war- 
rants, and  other  like  evidences  or  certificates  of  indebtedness, 
shall  bear  interest  at  the  rate  of  eight  per  centum  per  annum 
from  the  date  of  the  presentation  tliereof  for  payment  at  tlie 
treasury  where  the  same  may  be  payable,  until  there  is  money 
in  the  treasury  for  the  payment  thereof,  except  when  otherwise 
specially  provided  by  law,  and  every  county  treasurer,  town 
treasurer  and  city  treasurer  to  whom  any  such  count}^  town  or 
city  order  or  warrant  is  presented  for  payment,  and  who  shall 
not  have  on  hand  the  funds  to  pa^^  the  same,  shall  indorse  thereon 
the  rate  of  interest  said  order  or  warrant  will  draw,  and  the  date 
of  such  presentation,  and  subscribe  such  indorsement  with  his 
official  signature."— Jf/?/'s  St.,  §  2254. 

"In  all  executions,  to  be  issued  upon  judgments  recovered 
upon  contracts  expressed  or  implied,  it  shall  be  lawful  to  direct 
the  collection  of  interest  on  the  said  judgment  from  the  time  of 
recovering  the  same  until  paid,  at  the  rate  of  ten  per  cent  per 
annum." — Mill's  St.,  §  2536. 

"It  shall  be  lawful  for  any  defendant,  his  heirs,  executors, 
administrators  or  grantees,  whose  lands  or  tenements  shall  be 
sold  by  virtue  of  any  execution  within  six  months  from  such 
sale,  to  redeem  such  lands  or  tenements  by  paying  to  the  pur- 
chaser thereof,  his  executors,  administrators  or  assigns,  or 
the  sheriff  or  other  officer  who  sold  the  same,  for  the  benefit  of 
such  purchaser,  the  sum  of  money  which  ma}^  have  been  paid 
on  the  purchase  thereof,^  or  the  amount  given  or  bid  if  pur- 
chased by  the  plaintiff  in  the  execution,  together  with  the  inter- 
est thereon  at  the  rate  of  ten  per  cent,  from  the  time  of  such 
sale;  and  on  such  sum  being  paid  as  aforesaid,  the  said  sale 
and  the  certificate  thereupon  granted  shall  be  null  and  void." — 
3Iiirs  St.,  §  2547. 

If  "judgment  be  rendered  upon  any  note  or  bond,  or  for  a 
balance  due  upona  settled  account,  the  justice  shall  allow  inter- 
est from  the  time  when  the  same  became  due,  and  include  the 
same  in  the  said  judgment ;  and  in  all  cases  the  judgment  shall 

'  The  next  section  (2548)  gives  proceedings  for  redemption  after  six 
months. 


328  THE    LAW    OF    INTEREST. 

l)onr  intorcst  .it  tlie  rate  of  ten  per  cent  per  aiinuin  until  paid." 
— .l/;7/\s*S7.,  §  2647. 

If  constables  fail  to  return  executions  within  ten  clays  after 
the  return  day,  or  if  the  claims  are  wholly  or  i)artially  lost,  etc., 
thev  shall  be  charged  interest  from  the  date  of  the  judgment. — 
3Lirs  St.,  §2676. 

Suit  may  l)e  begun  when  the  subjectof  it  is  notpa^'able.  In 
such  c.  case,  '"a  rebate  of  interest  from  the  time  when  the  judg- 
ment is  rendered  until  the  maturity  of  the  debt  shall  be  allowed 
in  all  cases  when  a  judgment  in  favor  of  the  plaintiff  isiendered 
under  the  provisions  of  this  section." — MilVstSt.,  §  2703. 

"On  the  first  day  of  March  the  unpaid  taxes  of  the  preceding 
year  1  ecomc  delinquent,  and  shall  draw  interest  at  the  rate  of 
twenty-five  per  cent,  per  annum  ;  but  the  treasuirr  shall  continue 
to  receive  payments  of  the  same  with  interest  alter  the  first  day 
of  ^larcli  until  the  day  of  sale   for  taxes." — Mill's  St.,  §  3864. 

'•Real  property,  sold  under  the  [)rovisions  of  this  act,^  may 
be  redeemed  by  the  ownei',  his  agent,  assignee  or  attorne}',  at 
any  tifne  before  the  expiration  of  three  years  from  the  date  of 
sale,  ami  at  any  time  before  the  execution  of  the  deed  to  the 
ptirchaser,  his  heirs  or  assigns,  by  the  payment  to  the  trcas- 
in-er  of  the  proper  county,  to  be  held  by  him  subject  to  the  order 
of  the  purchaser  of  the  amount  lor  which  the  same  was  sold, 
with  interest  thereon  at  the  rate  of  twenty-five  per  cent,  per  an- 
iiumfromthe  dateof  sale,  and  fifteen  per  cent,  on  tlie  sum  if  re- 
deemed after  three  months  and  within  one  3'ear  from  the  date 
of  sale,  and  forty  per  cent,  if  redeemed  after  one  year  and  within 
two  years  from  tlie  date  of  sale,  and  fiCt^'  per  cent,  if  redeemed 
after  two  (2)  years  and  within  three  (3)  years  together  with  the 
amount  of  all  taxes  accruing  on  such  real  estate  after  the  first 
sale,  paid  by  the  purchaser  and  indorsed  on  his  certificate  of 
purchase,  wiih  interest  on  the  same  at  the  rate  of  twenty-five 
percent,  per  annum  on  such  taxes  paid  subsequent  to  such  sale  ; 
but  if  said  subsequent  taxes  should  be  paid  before  the  time  when 
unpaid  taxes  levied  for  that  year  would  become  delinijuent, 
interest  shall  only  l)e  com[)uted  from  the  time  of  their  delin- 
quency."— MiWs  St.,  §  3905. 

'•If  the  court  shall  direct  that  the  executor  or  administrator 
raise  money  by  mortgage  of  any  of  the  real  estate,  the  order 
shall  specify  a  rate  of  interest  not  exceeding  which,  and  a  [)e- 
riod  for  not  less  than  which  such  loan  shall  be  made." — MilVs 
St.,  §  4763. 

If  shares  in  a  deceased  person's  estate  arc  not  paid  over  for 
any  reason,  the  county  treasurer  shall  hold  the  funds  without 
interest.— J/t'W'i-  *S7.,  §  4804. 

'  For  collection  of  taxes. 


INTEREST   STATUTES.  329 


CONNECTICUT. 

"The  treasurer  of  mi}^  town  may,  at  any  time,  give  notice  to 
all  persons  holding  orders  drawn  by  the  selectmen  on  the  treas- 
urer of  such  town  to  present  them  for  payment  on  or  before  a 
certain  day  to  be  fixed  in  said  notice,  which  shall  be  at  least 
thirty  days  after  the  date  thereof.  Such  notice  shall  be  adver- 
tised for  three  weeks  successively  in  a  newspaper  printed  or 
having  circulation  in  said  town,  and  be  posted  on  the  sign-posts 
therein.  If  any  person  holding  an  order,  outstanding  at  the 
time  of  such  notice,  shall  fail  to  present  it  for  payment  on  or 
before  the  da}'  fixed  in  said  notice,  no  interest  shall  be  allowed 
on  it  after  said  day." — G.  S.,  §  86. 

"Tiie  rate  of  interest  on  all  existing  loans  of  the  school  fund 
in  this  State,  and  upon  all  hereafter  made,  shall  not  be  more 
than  six  per  cent,  per  annum,  payable  semi-annually." — G.  S., 
§  354. 

"When  the  semi-annual  interest  due  on  any  bond  or  note 
given  for  moneys  loaned  from  the  school  fund  shall  remain  fifteen 
days  or  more  after  it  shall  have  become  due,  the  School  Fund 
Commissioner  is  authorized  to  charge  interest  thereon  from  the 
time  the  same  became  due,  and  if  the  semi-annual  interest  shall 
remain  unpaid  six  months  after  it  shall  have  become  due,  the 
interest  charged  shall  be  at  the  rate  of  nine  per  cent,  per  annum, 
until  the  same  is  paid." — G.  S.,  §  355. 

"On  every  execution  issued  on  a  judgment,  legal  interest  on 
the  amountof  the  judgment  shall  be  collected." — G.  S.,  §  1154. 

"No  savings  bank  shall  demand  or  receive  on  any  loan,  either 
as  bonus,  commission,  or  tax,  or  in  any  other  way,  directly  or 
indirectly,  more  than  the  value  of  six  dollars  for  the  forbear- 
ance of  one  hundred  dollars  a  year,  and  at  that  rate  for  a  greater 
or  less  sum,  or  for  a  longer  or  shorter  period  ;  but  the  taking  of 
interest  in  advance  for  a  period  not  to  exceed  six  months,  and 
the  reimbursement  of  any  money  paid  by  said  bank  for  insur- 
ance on  property  mortnagrd  to  them,  shall  not  be  deemed  a  vi- 
olation of  this  section."— G'.  S.,  §  1810. 

"The  compensation  for  forbearance  of  property  loaned  at  a 
fixed  valuation,  or  for  money,  shall,  in  the  absence  of  any  agree- 
ment to  the  contrary,  be  at  the  rate  of  six  per  cent,  a  year  ;  and, 
in  computing  interest,  three  hundred  and  sixty  days  may  be 
considered  a  year."— 6?.  *S.,  §  2941. 

"Interest  nX  the  rate  of  six  per  cent,  a  year,  and  no  more,  mav 
be  recovered  and  allowed  in  civil  actions,  including  actions  to 
recover  money  loaned  at  a  greater  rate  as  damages  for  the  de- 
tention of  money  after  it  becomes  payable.     But  judgment  may 


330  THE    LAW    OF   INTEllEST. 

he  given  in  any  court  for  the  recovery  of  taxes  assessed  and 
paid  upon  the  loan,  and  the  insurance  upon  the  estate  mortgaged 
to  secure  the  loan  whenever  the  borrower  lias  agreed  in  writing 
to  pay  such  taxes  or  insurance,  or  botli.  And  whenever  the 
maker  of  any  contract  is  u  resident  of  another  State,  or  the  mort- 
gage security  is  located  in  another  State,  any  obligee  oriiolder 
of  such  contract,  residing  in  this  State,  may  lawfully  recover 
any  agreed  rate  of  interest,  or  damages  on  such  contract  until 
it  is  fully  performed,  not  exceeding  the  legal  rate  of  interest  in 
the  State  w^here  such  contract  purports  to  have  been  made,  or 
such  mortgage  security  is  located." — G.  S.,  §  2942. 

"No  borrower  of  money  shall  be  peraitted  to  set  off  or  re- 
cover back,  by  any  proceeding  in  court,  any  sum  of  money  paid 
by  way  of  interest,  discount,  or  damage^',  for  the  detention  of 
money,  in  excess  of  the  rate  of  six  per  cent,  a  year." — G.  S. 
§  2943. 

"Pawnbrokers  and  loan-brokers,  and  all  persons  who  lend 
money  on  the  pledge  of  personal  property,  are  prohibited  from 
taking  or  receiving,  directly  or  indirectly,  any  more  than  at  the 
rate  of  twenty-five  per  cent,  per  annum,  for  the  use  of  money 
loaned  on  personal  property." — G.  S.,  §  3003. 

"  II  any  tax  laid  by  any  town,  city,  borough,  or  schoor  dis- 
trict, except  the  town  and  city  of  New  Haven,  and  any  scliool 
district  within  the  limits  of  said  town  of  New  Haven,  shall  n  n  nin 
unpaid  for  one  month,  or  in  said  town  or  city  of  New  ll:i\cn. 
or  in  any  school  district  within  the  limits  of  said  town  of  New 
Haven  for  two  months  after  the  same  shall  become  due  and  pay- 
able, interest  at  the  rate  of  nine  per  cent,  shall  be  charged  from 
the  time  when  such  tax  becomes  due  until  the  same  shall  be  paid, 
which  shall  be  collectible  as  a  part  of  said  tax  ;  and  said  col- 
lectors shall  keep  an  accurate  and  separate  account  of  all  such 
additions,  and  the  time  when  the  same  may  be  received,  and 
shall  pay  over  the  same  as  a  part  of  said  tax." — G.  >6'.,  §  3886. 

DELAWARE. 

"The  legal  rate  of  interest  is  six  per  centum  per  annum  ;  and 
if  any  person  shall,  directly  or  indirectly,  take  for  the  loan,  or 
use  of  money,  more  than  six  dollars  for  the  loan,  or  use,  of  one 
hundred  dollars,  for  one  3'ear,  and  in  that  proi)ortion,  lie  shall 
forfeit  and  pa}',  to  any  one  who  will  sue  for  the  same,  a  sum 
equal  to  the  monc}'  lent  —  one  half  for  the  use  of  the  person  so 
suing,  and  the  other  half  for  the  use  of  the  State." — Code,  ch.  63, 

§  1. 

"If  any  bnnk  incorporated  by  any  law  of  this  State  shall  here- 
after, either  dlrecUy  or  by  or  through  the  agency  or  employment 


INTEREST   STATUTES.  331 

of  any  person,  be  in  anywise  concerned  in  any  paper  or  secu- 
rity of  any  description  wliatever,  whereby  the  amount  of  protit 
to  said  bank  to  arise  from  said  transaction  shall  exceed  the  rate 
of  one  per  cent.,  for  sixty  days,  such  bank  shall  be  deemed  and 
taken  to  have  forfeited  its  charter ;  and  furthermore,  the  direc- 
tors or  managers  of  the  affairs  of  said  bank  who  knowingly  and 
intentionally  assent  to  the  violation  of  the  foregoing  provision, 
shall  severally  be  guilty  of  a  misdemeanor,  and  on  conviction 
thereof,  l\y  indictment,  shall  be  fined  at  tlie  discretion  of  the 
court :  Provided,  however,  That  in  case  of  a  draft  or  bill  drawn 
upon  a  place  between  which  and  the  city  of  Philadelphia  there 
shall  be,  at  the  time  of  the  negotiation  of  such  paper  a  rate  of 
exchange  below  the  par  thereof,  the  bank  negotiating  such  paper 
shall  be  allowed  to  add  the  exchange  to  the  profit  before  men- 
tioned and  take  the  whole  amount  of  such  prolit  and  exchange 
and  no  more  ;  and  provided  also,  That  when  application  shall 
be  made  for  the  purchase  of  a  draft  ou  any  place  other  than  that 
where  the  business  of  said  bank  is  transacted,  it  shall  l)e  law- 
ful for  the  said  bank  to  charge  for  the  accommodation,  a  reason- 
able exchange.  Nothing  herein  contained  shall  be  held  or 
taken  to  contravene  the  usage  with  banks  of  taking  discount  or 
interest  in  advance." — Laws,  1855,  di.  2'21 . 

DISTRICT  OF  COLUMBIA. 

"The  rate  of  interest  upon  judgments  or  decrees,  and  upon 
the  loan  or  forbearance  of  any  money,  goods,  or  things  in 
action,  shall  continue  to  be  six  dollars  upon  one  hundred  dol- 
lars for  one  year,  and  after  that  rate  for  a  greater  or  less  sum, 
or  for  a  longer  or  shorter  time,  except  as  provided  in  this  chap- 
ter."—i2.  S.,  §  713. 

"In  all  contracts  made  it  shall  be  lawful  for  the  parties  to 
stipulate  or  agree  in  writing  that  the  rate  of  ten  per  centum 
per  annum,  or  any  less  sum,  of  interest  shall  be  taken  and  paid 
upon  every  one  hundred  dollars  of  money  loaned,  or  in  any 
manner  due  and  owing  from  any  person  or  corporation  in  the 
District."— 72.  S.,  §  714. 

"If  any  person  or  corporation  shall  contract  to  receive  a 
frreater  rate  of  interest  than  ten  per  cent,  upon  any  contract  in 
writing,  or  six  per  cent,  upon  any  verbal  contract,  such  per- 
son or  corporation  shall  forfeit  the  whole  of  the  interest  so 
contracted  to  be  received,  and  shall  be  entitled  only  to  recover 
the  principal  sum  due  to  such  person  or  corporation." — R,  S., 
§  715. 

"If  any  person  or  corporation  within  the  District  shall  di- 
rectly or  indirectly    take  or  receive   any   greater   amount   of 


332  THE    LAW   OF   INTEREST. 

interest  than  is  provided  for  in  this  chapter,  upon  any  contract 
or  agreement  whatever,  it  shall  be  lawful  for  the  person,  or  his 
personal  representative,  or  the  corporation  paying  Lhc  same,  to 
sue  for  anil  recover  all  the  interest  paid  upon  any  such  con- 
tract or  agreement  from  the  person  or  his  personal  represen- 
tatives, or  from  the  corporation  receiving  such  unlawful  in- 
terest ;  but  the  suit  to  recover  back  such  interest  shall  be  brought 
within  one  year  after  such  unlawful  interest  shall  have  been 
paid  or  taken. "^ — R.  S.,  §  71G. 

"Upon  all  judgments  rendered  on  the  common-law  side  of 
the  court  in  actions  founded  on  contracts,  interest  at  the  rate  of 
six  per  centum  per  annum  shall  be  awarded  on  the  principal 
sum  due  until  the  judgment  shall  be  satislietl,  and  the  amount 
which  is  to  bear  interest  and  the  time  from  which  it  is  to  be 
paid  shall  be  ascertained  by  the  verdict  of  the  jury  sworn  in 
the  cause."— 7i\  S.,  §  829. 

"Judgments  [of  justices  of  the  peace]  shall  bear  interest  from 
their  date  until  paid  or  satisfied." — R.  aS.,  §  1007. 

FLORIDA. 

"All  judgments  (and  decrees)  shall  bear  interest  at  the  rate 
of  eigiit  per  centum  [)er  annum." — R.  <6'.,  §  11 76. 

"In  all  cases  where  interest  shall  accrue  without  a  special 
contract  for  the  rate  thei'eof,  the  rate  shall  be  eight  per  cent, 
per  annum." — IL  S.,  §  2320. 

"All  contracts  for  the  payment  of  interest  upon  any  loan, 
advance  of  mone}',  or  forbearance  to  enforce  the  collection  of 
any  debt,  or  upon  any  contract  whatever,  at  a  higher  rate  of 
interest  than  ten  per  centum  per  annum,  are  hereby  declared 
usurious." — Laics,  1891,  ch.  4022,  §  1. 

"It  shall  not  be  lawful  for  any  person,  company  or  corpor- 
ation, to  reserve,  charge  or  take,  for  any  loan  or  advance  of 
money,  or  forbearance  to  enforce  the  collection  of  any  sum  of 
money,  a  rate  of  interest  greater  than  ten  per  centum  per  an- 
num, either  directly  or  indirectly,  by  way  of  commissions  for 
advances,  discounts,  exchange,  o,r  by  any  contract,  contrivance 
or  device  whatever,  whereby  the  debtor  is  requiied  or  obligated 
to  pay  a  greater  sum  than  the  actual  [)rincipal  sum  received, 
together  with  interest  at  the  rate  often  per  centum  per  ainnim 
as  ^foresaid"  (excepting  loans  of  building,  loan  and  other  nni- 
tual  benefit  associations  to  their  members). — Laws,  1891,  c/i. 
4022,  §  2. 

'  Section  717  provides  tliat  this  soctiou  has  no  etl'ect  on  the  oporaliou 
of  the  Nulioual  Bank  law. 


INTEREST   STATUTES.  333 

"Any  person,  company  or  corporation,  violating  the  pro- 
visions of  tliis  act,  shall  forfeit  the  entire  interest  so  charged, 
or  taken  or  contracted  to  be  charged,  reserved,  or  taken,  and 
only  the  actual  principal  sum  of  such  usurious  contracts  can 
be  enforced  at  law  or  in  equity:  Provided,  however.  That  no 
bona-Jide  endorsee  or  transferee,  of  negotiable  paper,  purchased 
before  maturity,  shall  be  affected  by  any  usurious  interest,  ex- 
acted by  any  former  holder  of  such  paper,  unless  the  usurious 
character  should  appear  on  its  face,  or  the  said  endorsee  or 
transferee  shall  have  had  actual  notice  of  the  same  before  the 
purchase  of  such  paper,  but  double  the  amount  of  such  usurious 
interest,  may,  in  such  cases,  be  recovered  after  payment,  by 
action  against  the  party  originally  exacting  the  same  in  any 
court  of  competent  jurisdiction,  provided  such  action  be  com- 
menced within  one  year  from  the  maturity  of  such  paper." — 
Laws,  1891,  ch.  4022,  §  3. 

GEORGIA. 

"The  legal  rate  of  interest  shall  remain  seven  per  centum 
per  annum,  where  the  rate  per  cent,  is  not  named  in  the  con- 
tract, and  any  higher  rate  must  be  specified  in  writing,  but  in 
no  event  to  exceed  eight  per  cent,  per  annum." — Code,    §  2050. 

"Usury  is  the  reserving  and  taking,  or  contracting  to  reserve 
and  take,  either  directly  or  by  indirection,  a  greater  sum  for 
the  use  of  money  than  the  lawful  interest." — Code,  §  2051. 

"Interest  from  date,  when  stipulated,  if  the  del)t  is  not 
punctually  paid  at  maturity,  may  be  recovered  :  Provided,  in- 
terest has  not  already  been  included  in  the  principal  amount." 
—Code,  §  2052. 

"Every  contract  bears  interest  according  to  the  law  of  the 
place  of  the  contract  at  the  time  of  the  contract,  unless  upon 
its  face  it  is  apparent  that  ihe  intention  of  the  parties  referred 
the  execution  of  the  contract  to  another  forum  :  in  this  ca.^e,  the 
law  of  the  forum  shall  govern." — Code,  §  2053. 

"All  judgments  in  this  State  bear  lawful  interest  upon  the 
jirinoipal  amount  recovered." — Code,  §  2054. 

"When  a  payment  is  made  upon  any  debt,  it  shall  be  applied 
first  to  the  discharge  of  any  interest  due  at  the  time,  and  the 
balance,  if  any,  to  the  reduction  of  the  principal.  If  the  pay- 
ment does  not  extinguish  the  interest  then  due,  no  interest 
sh.'ill  be  calculated  on  such  balance  of  interest,  but  only  on  the 
prinfipiil  amount  up  to  the  time  of  the  next  payment."— Coc??, 
§  2055. 

"All  liquidated  demands,  where  by  agreement  or  otherwise 
the  sum  to  be  paid  is  fixed  or  certain,  bear  interest  from  the 


334  THE    LAW    OF   INTEREST. 

time  tlid  party  is  liable  and  bound  to  pay  them  ;  if  payable  on 
demand,  IVoni  the  time  of  the  demand.  In  case  of  promissory 
notes  payable  on  demand,  the  law  presumes  a  demand  instantly, 
and  <:ives  interest  from  date." — Code,  §  2056. 

"All  accounts  of  merchants,  tradesmen,  mechanics,  which 
1)V  custom  become  due  at  the  end  of  the  j'ear,  bear  interest 
from  that  time  upon  the  amount  actually  due  whenever  ascer- 
tained."—Cof?e,  §  2057. 

"It  shall  not  be  lawful  for  any  person,  company  or  corporation 
to  reserve,  charge  or  take  for  any  loan  or  advance  of  nionej', 
or  forbearance  to  enforce  the  collection  of  any  sum  of  money, 
anv  rate  of  interest  greater  than  eight  per  centum  per  annum, 
either  directly  or  indircctl}',  by  way  of  commission  for  advances, 
discount,  exchange,  or  by  an\'  contract  or  contrivance  or  de- 
vice whatever." — Code,  §  2057o. 

'•Any  person,  company  or  corporation  violating  the  pro- 
visions of  the  foregoing  section,  shall  forfeit  the  excess  of 
interest  so  charged  or  taken,  or  contracted  to  be  reserved, 
charged  or  taken." — Code,  §  2057^. 

"The  amount  of  forfeit  as  aforesaid  may  be  plead  as  a  set- 
off in  any  action  for  the  recovery  of  the  principal  sum  loaned 
or  advanced  by  the  defendant  in  said  action." — Code,  §  2057c. 

"iSo  contrivance  or  arrangement  between  the  parties  to  an}' 
such  unlawful  transaction,  or  their  privies,  shall  have  the  effect 
to  discharge  such  forfeiture,  except  it  be  an  actual  and  full 
payment  of  the  amount  so  forfeited."^ — Code,  §  2057(?. 

"Any  plea  or  suit  for  the  recovery  of  such  forfeiture  shall 
not  1)0  barred  by  lapse  of  time  shorter  than  one  j-ear." — Code, 
§  205  7e. 

"All  titles  to  property  made  as  a  part  of  an  usurious  con- 
tract, or  to  evade  the  laws  against  usur}',  are  void." — Code, 
§  2057/. 

"Every  provision  in  the  charter  of  any  corporation,  granted 
since  the  1st  day  of  January,  1863,  inconsistent  with  the  fore- 
going provisions  of  this  Article,  is  hereb}'  repealed." — Code,  § 
2057.7. 

"All  contracts  for  rent  shall  bear  interest  from  the  time  the 
rent  is  due,  and  judgments  upon  suits  for  rent  may  be  rendered 
at  tiie  fu-st  ievm."— Code,  §  2288. 

"A  general  legacy  usually  bears  interest  from  the  cx[)ira- 
tion  of  twelve  montlis  from  the  death  of  the  testator.  But  when 
the  condition  of  the  estate  at  that  lime,  as  to  the  payment  of 
debts  and  legacies,  is  doubtful,  or  the  fund  out  of  which  the 
legacy  is  to  be  paid,  is  unavailable  for  all  the  charges  made 
upon  it,  or  any  other   equitable  circumstance  intervenes,  the 


INTEREST    STATUTES.  335 

general  rule  yields  to  the  equity  and  necessity  of  the  particular 
case.  A  general  legacy,  to  be  paid  at  a  future  time  or  event, 
bears  no  interest  until  such  time  or  event." — Code,  §  2460. 

"  A  reasonable  time,  according  to  the  facts  in  each  case, 
should  be  allowed  to  the  trustee  to  invest  funds  coming  into  his 
hands  before  charging  him  with  interest  thereon  ;  and,  in  like 
manner,  disbursements  made  by  the  trustee  should,  as  a  general 
rule,  bear  interest  from  some  period  anterior  to  the  date  of  pay- 
ment, according  as  he  may  have  retained  funds  to  meet  them.  In 
every  case,  the  object  is  to  charge  the  trustee  with  such  inter- 
est as  a  diligent  man  would  make,  and  to  see  that  the  trust 
fund  is  not  used  for  private  benefit." — Code,  §  2601. 

The  interest  to  be  charged  against  trustees  appointed  since 
the  first  of  Januar^^,  1848,  and  hereafter  appointed,  shall  be  at 
the  rate  of  seven  per  cent,  per  annum,  without  compounding, 
for  six  years,  from  the  date  of  their  qualification  ;  and  after  that 
time  at  the  rate  of  six  per  cent,  per  annum,  annually  compounded. 
But  any  trustee  may  relieve  himself  from  this  rule  by  returning 
annually  the  interest  actually  made  and  accounting  for  the  bal- 
ance of  the  fund.  Any  distributee  may  recover  greater  inter- 
est by  showing  that  the  trustee  actually  received  more,  or  that 
he  used  the  funds  himself  to  greater  profit." — Code,  §  2603. 

"  In  all  cases  where  an  amount  ascertained  would  be  the 
damages  at  the  time  of  the  breach,  it  may  be  increased  by  the 
addition  of  legal  interest  from  that  time  till  the  recovery." — 
Code,  §  2945. 

"  The  plea  of  usury  must  set  forth  the  sum  upon  which  it 
was  paid,  or  to  be  paid,  the  time  when  the  contract  was  made, 
when  payable,  and  the  amount  of  usury  agreed  upon,  taken  or 
reserved." — Code,  §  3470a. 

"As  a  general  rule,  a  part}^  who  is  prevented  from  paying 
over  money  by  process  of  law  is  not  liable  for  interest:  liut  if 
a  garnishee  resists  the  payment  of  the  fund  in  his  hands,  or 
controverts  his  indebtedness,  he  is  liable  for  interest  thereon  — 
but  ho  may  relieve  himself  from  interest  by  paying  the  fund  into 
Court."— Code,  §3546 

"  In  all  cases  where  judgment  may  be  obtained,  such  judg- 
ment shall  be  entered  up  for  the  principal  sum  due,  with  in- 
terest :  Provided  the  claim  upon  which  it  was  obtained  draws 
interest ;  but  no  part  of  such  judgment  shall  bear  interest  ex- 
cept the  principal  which  may  be  due  on  the  original  debt." — 
Code,  §  3570. 

"  If  any  Sheriff,  coroner,  Justice  of  the  Peace,  constable. 
Clerk  of  the  Superior  Court,  or  attorney  at  law,  shall  fail,  upon 
application,  to  pay  to  the  proper  person,  or  his  attorney,  any 


33 G  TUE    LAW    OF    INTEREST. 

inone}'  tlK\v  mjiy  have  in  their  liaiids,  which  the}'  may  have  col- 
lected l)y  virtue  of  their  oflice,  the  party  entitled  thereto,  or 
his  attorney,  may  serve  said  ollicer  with  a  written  demand  for 
the  same,  and  if  not  then  paiil,  for  such  neglect  or  refusal  the 
said  officer  shall  be  compelled  to  pay  at  the  rate  of  twenty  per 
cent,  per  annum  upon  the  sum  he  has  in  his  hands,  from  the 
date  of  such  demand,  unless  good  cause  be  shown  to  the  con- 
trary."—Code,  §  3950. 

Executions  for  state,  county  and  municipal  taxes  bear  seven 
per  cent  interest,  except  in  municipalities  assessing  other  dam- 
ages upon  delinquents. — Acts  o/1890.  No.  97. 

IDAHO. 

"  "When  there  is  no  express  contract  in  writing  fixing  a  dif- 
ferent rate  of  interest,  interest  is  allowed  at  the  rate  of  ten 
cents  on  the  hundred  h}-  the  year,  on  : 

"  1.   Money  due  by  express  contract; 

"2.  Money  after  the  same  becomes  due ; 

"3.  Money  lent ; 

''4.  Money  due  on  the  judgment  of  any  competent  court  or 
tribunal  ; 

"  5.  Money  received  to  the  use  of  another,  and  retained  be- 
yond a  reasonable  time  without  the  owner's  consent,  express  or 
implied  ; 

"  G.  Money  due  on  the  settlement  of  mutual  accounts  from 
the  day  the  balance  is  ascertained  ; 

''  7.  Money  due  upon  open  accounts  after  six  months  from 
the  date  of  the  last  item."— iJ.  S.,  §  1263. 

"  Parties  may  agree  in  writing  for  the  payment  of  any  rate 
of  interest  on  money  due  or  to  become  due  on  anj' contract,  not 
to  exceed  the  sum  of  one  and  one-half  per  cent,  per  month  ;  an}' 
judgment  rendered  on  such  contract  bears  inleiest  at  the  rate 
of  ten  j)er  cent,  per  annum  until  satisfied." — J{.  S.,  §  1264. 

"  Compound  interest  is  not  allowed,  but  a  debtor  may  agree 
in  writing  to  pay  interest  upon  interest  over-due  at  the  rale  of 
such  agreement." — R.  /S.,  §  1265. 

"  If  it  is  ascertained  in  any  suit  bronpht  on  any  contract, 
that  a  rate  of  interest  has  been  contracted  for  greater  than  is 
authorized  by  this  chai)ter,  either  directly  or  indirectly,  in 
money  or  in  property,  such  contract  works  a  forfeiture  of  ten 
cents  on  the  Imndrcd  by  the  year,  and  at  that  rate,  upon  the 
amount  of  such  contract,  to  the  School  Fund  of  the  counly  in 
which  the  suit  is  brought  and  the  plaintiff  must  have  judgment 
for  the  principal  sum  less  all  payments  of  i)iincipal  or  intei-est 
theretofore  made  and  without  interest  or  cost.     The  court  must 


INTEREST   STATUTES.  337 

render  judgment  in  said  action  for  ten  per  cent,  per  annum  upon 
tlie  entire  principal  of  said  contract,  against  the  defendant  in 
lavor  of  tlie  Territory  [State]  for  tlie  use  of  tlie  Scliool  Fund  of 
tlie  county,  wlietlier  tlie  unlawful  interest  is  contested  or  not ;  and 
in  no  case  where  unLnwful  interest  is  contracted  for,  must  the 
plaintiff'  have  judgment  for  more  than  the  principal  sura  less  the 
p.iyments  already  made,  whether  the  unlawful  interest  be  incor- 
porated with  the  principal  sum  or  not.  But  no  indorsee  in  due 
course  of  negotiable  paper,  is  aff'ected  by  any  usury  exacted  by 
any  former  holder  of  such  paper  unless  he  have  actual  notice  of 
the  usury  previous  to  his  purchase ;  but  in  no  such  case  the 
judgment  above  provided  in  favor  of  the  School  Fund  must  be 
entered  against  the  drawer  or  maker,  if  a  party  to  the  action, 
and  he  may  recover  back  the  usury  paid  from  the  party  who 
received  the  same." — li.  S.,  §  1266. 

"Interest  at  the  rate  of  two  per  cent,  per  month  must  be 
collected  on  such  delinquent  taxes  ^  from  the  time  they  were 
first  delinquent  until  paid." — R.  S.,  §  1573. 

"When  any  warrant  is  presented  to  the  [County]Treasurer  for 
pa3'ment  and  the  same  is  not  paid  for  want  of  funds,  the  Treas- 
urer must  endorse  thereon,  'Not  paid  for  want  of  funds,'  annex- 
ing the  date  of  presentation  and  sign  his  name  thereto;  and 
from  that  time  until  paid  the  warrant  bears  seven  per  cent,  per 
annum  interest." — J{.  S.,  §  1844. 

"  From  the  time  of  notice  of  dishonor  and  demand  of  pay- 
ment [of  bills  of  exchange],  lawful  interest  must  be  allowed 
upon  the  aggregate  amount  of  the  principal  sum  specified  in  the 
l)ill,  and  the  damages  mentioned  in  the  preceding  section. "^ — 
U.S.,  §3563. 

"  If  the  debt  for  which  the  mortgage,  lien  or  incumbrance  is 
held  is  not  all  due,  so  soon  as  suflBcient  of  the  property  has 
been  sold  to  pay  the  amount  due,  with  costs,  the  sale  must 
cease ;  and  afterwards,  as  often  as  more  becomes  due,  for 
principal  or  interest,  llie  court  may,  on  motion,  order  more  to 
l)e  sold.  But  if  the  property  cannot  be  sold  in  portions,  without 
injury  to  the  parties,  the  whole  may  be  ordered  to  be  sold  in 
the  first  instance,  and  the  entire  debt  and  costs  paid,  there  be- 
ing a  rebate  of  interest  where  such  rebate  is  proper." — E.  S., 
§4522. 

"The  Clerk  must  include  in  the  judgment  entered  up  by  him, 
any  interest  on  the  verdict  or  decision  of  the  court,  from  the 
time  it  was  rendered  or  made,  and  the  costs,  if  the  same  have 

'  Taxes  not  paid  and  cancelled  on  the  collector's  book. 
^  The  preceding  section  specifies  certain  damages  instead  of  interest 
after  notice  of  dishonor,  etc. 
22 


338  THE    LAW    OF    INTEREST. 

been  taxcil  or  ascertained  ;  and  he  must,  within  two  daj's  after 
the  same  are  taxed  or  ascertained,  if  not  included  in  the  judg- 
ment, insert  the  same  in  a  blank  left  in  the  judguient  for  that 
purpose,  and  must  make  a  similar  insertion  of  the  costs  in  the 
copies  and  docket  of  the  judgment." — li.  S.,  §  4914. 

Municipal  bonds  are  not  to  bear  more  than  six  per  cent  in- 
terest.— Acts  of  1801,  2'-  ^^' 

ILLINOIS. 

"All  mono3-s,  bonds,  notes  and  credits  which  any  adminis- 
trator or  executor  may  have  in  his  possession  or  control  as  prop- 
erty or  assets  of  the  estate,  at  a  period  of  two  j-ears  and  six 
montii3  from  the  date  of  his  letters  testamentary  or  of  adminis- 
tration, shall  bear  interest,  and  the  executor  or  administrator 
shall  be  charged  interest  thereon  from  said  period  at  the  rate 
of  ten  per  cent.,  or  after  two  years  and  six  months  from  any 
subsequent  time  that  he  may  have  discovered  and  received  the 
same,  unless  good  cause  is  shown  to  the  court  why  such  should 
not  be  taxed."— 7?.  S.  ch.  3,  §  113. 

"The  rate  of  interest  upon  the  loan  or  forbearance  of  any 
money,  goods, or  thing  in  action,  shall  be  five  dollars  {$i))  upon 
one  hundred  dollars  (8100)  for  one  j'ear,  and  after  that  rate 
for  a  greater  or  less  sum,  or  for  a  longer  or  shorter  time,  ex- 
cept as  heicin  provided." — Lcnvs  o/1891,  2?-  149. 

"Creditors  shall  be  allowetl  to  receive  at  tiie  rate  of  five  (5) 
per  centum  per  aimuni  for  all  moneys  after  they  become  due  on 
any  bond,  bill,  promissory  note  or  other  instrument  of  writing; 
on  money  lent  or  advanced  for  the  use  of  another  ;  on  money 
due  on  tiae  settlement  of  account  from  the  day  of  liquidating 
accounts  between  the  parties  and  ascertaining  the  balance,  on 
money  received  to  the  use  of  another,  and  retained  without  the 
owner's  knowledge,  and  on  money  withheld  by  an  unreasonable 
and  vexatious  delay  of  payment." — Laivs  o/1891,  2>.  149. 

"Judgments  recovered  before  any  court  or  magistrate,  shall 
draw  interest  at  the  rate  of  five  (5)  per  centum  per  annum  from 
the  dale  of  the  same  until  satisfied.  When  judgment  is  en- 
tered upon  any  award,  report  or  verdict,  interest  shall  be  com- 
puted at  the  rate  aforesaid,  from  the  time  when  made  or  ren- 
dered to  the  time  of  rendering  judgment  upon  the  snme,  and 
made  a  part  of  the  judgment." — Lmvs  o/ 1891,  p.  1.50. 

"In  all  written  contracts  it  shall  be  lawful  for  the  parties  to 
stipulate  or  agree  that  seven  (7)  percent,  per  aninim,  or  any 
less  sum  of  interest,  shall  be  taken  and  paid  upon  every  one 
hundred  (8100)  dollars  of  money  loaned  or  in  any  manner  due 
and  owing  from  any  i)crsou  or  cori)oration  to  any  other  person 


INTEREST    STATUTES.  339 

or  corporation  in  this  State,  and  after  Ihat  rate  for  a  greater  or 
less  sum,  or  for  a  longer  or  sliorter  time,  except  as  herein  pro- 
vide'!."—i^aws  ofl8'Jl,p.  150. 

"If  any  person  or  corijoration  in  this  State  shall  contract  to 
receive  a  greater  rate  of  interest  or  discount  than  seven  (7) 
per  cent,  upon  any  contract,  verbal  or  written,  such  person  or 
corporation  shall  forfeit  tiie  whole  of  said  interest  so  contracted 
to  be  received,  and  shall  be  entitled  only  to  recover  the  prin- 
cipal sum  due  to  such  person  or  corporation.  And  all  contracts 
executed  after  this  act  shall  take  effect,  which  shall  provide  for 
interest  or  compensation  at  a  greater  rate  than  herein  specified, 
on  account  of  non-payment  at  maturity,  shall  be  deemed  usu- 
rious, and  only  the  principal  sum  due  thereon  shall  be  recov- 
erable."— Laws  o/lSOl,  2^.  loO. 

"The  defense  of  usury  shall  not  be  allowed  in  any  suit,  un- 
less the  person  relying  upon  such  defense  shall  set  up  the  same 
by  plea,  or  file  in  the  cause  a  notice  in  writing,  stating  that  he 
intends  to  defend  against  the  contract  sued  upon  or  set  off,  on 
the  ground  that  the  contract  is  usurious." — 1{.  /S.,  ch.  74,  §  7. 

'•  When  any  written  contract,  wherever  paj^able,  shall  be 
made  in  this  State,  or  between  citizens  or  corporations  of  this 
State,  or  a  citizen  or  corporation  of  this  State  and  a  citizen  or 
corporation  of  any  other  State^  territory  or  country  (or  shall 
be  secured  by  mortgage  or  trust  deed  on  lands  in  tiiis  State), 
such  contract  may  bear  any  rate  of  interest  allowed  by  law, 
to  be  taken  or  contracted  for  by  persons  or  corporations  in  this 
State,  or  which  is  or  may  be  allowed  by  law  on  any  contract 
for  money  due  or  owing  in  this  State  :  Provided,  hoivever,  that 
such  rate  of  interest  shall  not  exceed  seven  per  cent,  per  an- 
num. Anil  if  any  such  person  or  corporation  shall  contract  to 
receive  a  greater  rate  of  interest  or  discount  than  seven  per 
cent,  upon  any  such  contract,  such  person  or  corporation  shall 
forfeit  the  whole  of  said  interest  so  contracted  to  be  received, 
and  shall  be  entitled  only  to  recover  the  principal  sum  due  to 
such  person  or  corporation." — Lcnvs  of  189 1 ,  p.  150. 

"Whenever,  in  any  statute,  act,  deed,  written  or  verbal,  con- 
tract, or  in  any  public  or  private  instrument  whatever,  any  cer- 
tain rate  of  interest  is  or  shall  be  mentioned,  and  no  period  of 
time  is  stated  for  which  such  rate  is  to  be  calculated,  interest 
shall  be  calculated  at  the  rate  mentioned,  by  the  year,  in  the 
same  manner  as  if  'per  annum'  or  'by  the  year'  had  been  added 
to  the  rate." — R.  S.,  ch.  74,  §  9. 

"In  all  computations  of  time,  and  of  interest  and  discounts, 
a  month  shall  be  considered  to  mean  a  calendar  month,  and  a 
year  shall  consist  of  twelve  calendar  months ;  and  in  computa- 


340  THE    LAW    OF    IXTEUEST. 

tioiis  of  interest  or  discount  for  any  number  of  days  loss  than 
a  month,  a  day  shall  be  considered  a  thirtieth  part  of  a  inonlii, 
and  interest  or  discount  shall  be  computed  for  sneii  fractional 
parts  of  a  month  upon  the  ratio  \vliich  such  number  of  days 
shall  bear  to  thirty."— /r?.  S.,  cli.  74,  §  10. 

"No  corporation  shall  hereafter  interpose  the  defense  of 
usury  in  any  action." — R.  S.,  ch.  74,  §  11. 

"JEvery  execution  issued  upon  a  judgment  shall  direct  the 
collection  of  interest  thereon,  from  the  date  of  the  recovery  of 
the  judo-mcnt  until  the  same  is  paid,  at  the  rate  of  six  per  cen- 
tum per  annum." — li.  JS.,  ch.  77,  §  7. 

Pawnbrokers  caiuiot  charge  more  than  three  per  cent  per 
month  for  loans. — E.  S.,  ch.  107,  §  2. 

INDIANA. 

"No  bank  shall  receive,  directly  or  indirectl}',  a  greater  rate 
of  interest  than  shall  be  allowed  l)y  law  to  individuals  loaning 
money." — Const.,  Art.  11,  §  9. 

"In  any  case  when  a  surety  on  any  bill,  note,  bond,  or  other 
instrument  in  writing  shall  be  comi)elled  to  pay  the  debt  or  ob- 
ligation of  the  principal  debtor,  such  surety  shall  recover  such 
rate  of  interest  on  the  amount  so  paid  by  him  lor  his  principal 
as  was  originally  provided  for  in  such  bill,  note,  bond,  or  other 
instrument  in  writing,  held  against  such  principal  debtor;  and 
the  judgment  therein  shall  bear  the  same  rate  of  interest,  not 
exceeding  ten  per  cent,  per  annum." — li.  S.,  §  1219. 

"  Cities  shall,  in  all  cases,  be  liable  to  pay  interest  on  their 
orders  or  other  liabilities  payable  on  demand  Irom  and  after  such 
demand,  which  shall  be  indorsed  on  the  same  by  the  Treasurer 
when  presented." — R.  S.,  §  3040. 

*'Tlie  principal  of  all  moneys,  whether  belonging  to  the  com- 
mon school  fund  or  to  the  congressional  townshi[)  school  fund, 
received  into  the  county  treasury,  shall  be  loaned  at  eight  i)er 
cent,  per  annum,  payable  annually  in  advance,  and  the  interest 
paid  out  as  prescribed  in  this  act,  and  not  otlierwise  :  and  any 
judgment  upon  any  note  or  mortgage  for  any  part  of  said  fund 
sliall  bear  eight  per  cent,  interest  from  the  date  thereof  till  the 
same  is  paid."— i?.  S.,  §  4369. 

"The  rate  of  interest  required  [on  loans  of  the  funds  of  the 
university]  shall  be  seven  per  cent,  in  advance,  payable  annually. 
On  failure  to  pay  any  installment  of  interest  when  due,  the  prin- 
cipal shall  forthwith  become  due;  and  the  note  and  mortgage 
may  ])e  collected."— /?.  S.,  §  4600. 

"The  interest  on  loans  or  forbearance  of  money,  goods,  or 
things  in  action,  when  the  parties  do  not  agree  on  the  rate,  shall 


INTEREST   STATUTES.  341 

be  six  dollars  a  year  on  one  hundred  dollars,  and  at  that  rate 
for  a  greater  or  less  sum,  or  for  a  shorter  or  longer  time  ;  but  it 
may  be  taken  yearly,  or  for  a  shorter  period,  in  advance.  No 
agreement  to  pay  a  higher  rate  shall  be  valid,  unless  the  same 
be  in  writing,  signed  by  the  party  to  be  charged  thereby;  and, 
in  such  case,  it  shall  not  be  lawful  to  contract  for  more  than  eight 
per  centum  per  annum." — B.  S.,  §  5198. 

"Interest  on  judgments  for  money,  hereafter  rendered,  shall 
be  from  the  date  of  the  return  of  the  verdict  or  finding  of  the 
Court,  until  tlie  same  shall  be  satisfied,  at  the  rate  per  cent, 
agreed  upon  by  the  parties  in  the  original  contract,  not  exceed- 
ing six  per  cent. ;  and  if  there  l)e  no  contract  by  the  parties,  at 
the  rate  of  six  dollars  a  year  on  one  hundred  dollars." — R.  S., 
§  5199. 

'•On  money  due  on  any  instrument  in  writing,  on  any  account 
stated  from  the  day  of  settlement,  or  an  account  closed  upon 
the  day  an  itemized  bill  shall  have  been  rendered  and  payment 
demanded,  or  on  money  had  and  received  for  the  use  of  another, 
and  retained  without  his  consent,  interest  sliall  be  allowed  at 
the  rate  of  six  dollars  a  year  on  one  hundred  dollars." — E.  /S., 
§  5200. 

"When  a  greater  rate  of  interest  than  is  hereby  allowed  shall 
be  contracted  for,  the  contract  shall  be  void  as  to  the  usurious 
interest  contracted  for;  and  in  an  action  on  such  contract,  if  it 
appear  that  interest  at  a  higher  rate  than  eight  per  cent,  has  been 
directly  or  indirectl}'  contracted  for,  the  excess  of  interest  over 
six  per  cent,  shall  be  deemed  usurious  and  illegal,  and  in  an  ac- 
tion on  a  contract  affected  by  such  usury,  the  excess  over  the 
legal  interest  may  be  recouped  by  the  debtor,  whenever  it  has 
been  reserved  or  paid  before  the  beginning  of  the  suit." — E.  S., 
§5201. 

"If  an  action  be  instituted  on  a  contract  in  which  illegal  in- 
terest shall  have  been  directly  or  indirectly  contracted  for,  and 
the  defendant  shall  have,  before  the  commencement  of  the  suit, 
tendered  to  the  plaintiff  his  principal,  with  six  per  cent,  interest, 
the  defendant  shall  recover  costs." — R.  S.,  §  5202. 

"When,  in  any  law  or  contract,  a  rate  of  interest  is  specified, 
but  no  period  of  time  is  mentioned  for  which  such  rate  is  to  be 
calculated,  itshall  be  deemed  to  be  by  the  year." — R.  S.,  §  5203. 

"The  provisions  of  this  Act  shall  apply  to  all  contracts  made 
within  this  State,  although  they  are  to  lie  performed  without 
this  State  ;  and  when  a  contract  shall  be  made  without  the  State, 
and  a  rate  of  interest  greater  than  that  herein  allowed  shall  be 
directly  or  indirectly  contracted  for,  and  a  mortgage  shall  be 
executed,  to  secure  the  performance  of  the  contract,  on  lands 


342  THE    LAW    OF    INTEREST. 

in  this  StJitc,  such  lands  shall  not  bo  liable  for  a  higher  rale  of 
interest  than  is  ()rovi(led  for  in  this  Act." — R.  S.,  §  5204. 

"Interest  on  public  funds,  purehase-nioney  oT  canal,  college, 
school,  or  saline  lands,  antl  upon  the  [)ernianent  school  fund, 
shall  be  at  tlie  rate  of  eight  dollars  a  year  on  one  hundred  dol- 
lars. But  nothing  herein  contained  shall  be  construed  as  affect- 
ing existing  contracts, ^  except  after  verdicts  as  herein  provided, 
nor  a  right  to  defend  in  a  suit  upon  such  contracts  for  excessive 
interest,  as  is  now  provided  by  law." — R.  S.,  §  5205. 

"Beyond  such  danKiges,-no  interest,  or  charges  acciuing  prior 
to  protest  shall  be  allowed;  but  interest  from  the  date  of  the 
l)rotest  may  be  recovered." — R.  S.,  §  5508. 

"Wlieuever  it  shall  be  necessary  to  construct,  complete,  or 
lopair  the  court-house,  jail,  or  other  county  buildings,  or  when- 
«'ver  it  may  be  desirable  to  fund  or  average  any  existing  debt 
incurred  for  county  purposes,  and  the  revenues  afforded  by  rea- 
sonable taxation  are  insufficient  to  do  the  same,  the  Count}-  Com- 
missioners may  borrow,  for  that  purpose,  any  sum  of  money  not 
exceeding  one  i)er  centum  on  the  assessed  valuation  of  the  real 
and  personal  property  of  the  county,  and  issue  bonds  therefor  in 
amounts  of  not  less  than  twenty-five  dollars  each,  and  bearing 
a  rate  of  interest  not  exceeding  the  legal  rate  in  the  State  or 
Territory  where  the  same  are  negotiated,  not  exceeding  the  rate 
of  ten  per  centum  i)er  annum  :  Provided,  That  no  second  or 
subsequent  loan  shall  be  made  or  authorized  by  said  Connnission- 
ers,  as  above  provided,  so  long  as  any  former  loan,  made  under 
the  provisions  of  this  Act,  shall  remain  unpaid."  —  E.  S.,  ^ 
5749. 

Each  county  treasurer  "shall  pay  all  orders  of  the  Auditor 
when  presented,  if  there  be  money  in  the  treasuiy  for  that  pui- 
pose,  antl  write  on  the  face  of  each  order  the  date  of  redemp- 
tion, over  his  signature.  If  there  be  co  funds  to  pay  such  or- 
der when  presented,  he  shall  endorse  thereon  'Not  paid  for  want 
of  funds,'  and  the  date  of  such  i)resentment,  over  his  signature  ; 
which  shall  entitle  such  order  to  draw,  thenceforth,  legal  inter- 
est:  Provided,  That  such  interest  shall  cease  from  the  date  of 
notice  by  publication  in  some  newspaper  printed  or  circulated 
in  his  county,  to  be  given  by  the  Treasurer,  that  there  are  funds 
to  redeem  such  outstanding  orders  ;  which  notice  the  Treasuier 
shall  irive."  — 72.  S.,  §  5920, 

"Where  bonds  or  stocks  are  now,  or  may  hereafter  be,  exempt 
from  taxation,  the  accrued  interest  on  such  bonds  or  dividends 

'  Existing  -whon  this  act  "was  passed. 

*  Certain  lifinldated  damages  stipulated  for  lu  the  preceding  section 
(5507)  of  the  statute. 


INTEREST   STATUTES.  343 

on  such  stock  shall  be  listed,  unless  otherwise  exempt,  as  per- 
sonal i^ropert}',  without  regard  to  the  time  when  the  same  is  to 
be  paid."—  B.  S.,  §  6304. 

IOWA. 

*'The  rule  of  interest  shall  be  six  cents  on  the  hundred  by  the 
year,  on  : 

"1.     Money  due  by  express  contract ; 

"  2.     Money  after  tlie  same  becomes  due  ; 

"3.     Money  lent; 

"  4.  Money  received  to  the  use  of  another,  and  retained  be- 
yond a  reasonable  time  without  the  owner's  consent,  express  or 
implied  ; 

"  5.  Money  due  on  settlement  of  matured  accounts  from  the 
day  the  balance  is  ascertained  ; 

"  6.  Money  due  upon  open  accounts  after  six  montlis  from 
the  date  of  the  last  item ; 

"  7.  Money  due,  or  to  become  due,  where  there  is  a  contrr:ct 
to  pay  interest,  and  no  rate  is  stipulated.  In  all  of  the  cases 
above  contemplated  parties  may  agree  in  writing  for  the  payment 
of  interest  not  exceeding  eight  cents  on  the  hundred  by  the 
year." — Rev.  Code,  §  2077,  amended  by  Acts  of  1890,  ch.  40. 

"Interest  shall  l)e  allowed  on  all  monej's.due  on  judgments 
and  decrees  of  any  competent  court  or  tribunal,  at  the  rate  of 
six  cents  on  the  hundred  by  the  year,  unless  a  different  rate  is 
fixed  by  the  contract  on  which  the  judgment  or  decree  is  ren- 
dered ;  in-which  case  the  judgment  or  decree  shall  draw  interest 
at  the  rate  expressed  in  the  contract,  not  exceeding  ten  cents 
on  the  hundred  by  the  year,  which  rates  must  be  expressed  in  the 
judgmentor  decree." — Rev.  Code,  §  2078. 

"No  person  shall,  directly  or  indirectly,  receive  in  money, 
goods,  or  things  in  action,  or  in  any  other  manner,  any  greater 
sum  or  value  for  the  loan  of  money,  or  upon  contract  founded 
upon  an}'  bargain,  sale,  or  loan  of  real  or  personal  property-,  llian 
is  in  this  chapter  i)rescribed." — Rev.  Code,  §  2079. 

'■Kit  shall  be  ascertained  in  any  suit  brought  on  any  contract, 
that  a  rate  of  interest  has  been  contracted  for  greater  than  is 
authorized  by  this  chapter,  either  directly  or  indirectly,  in 
money  or  property,  the  same  shall  work  a  forfeiture  of  ten  cents 
on  the  hundred  by  the  year  upon  the  amount  of  such  contract, 
to  the  school  fund  of  the  county  in  which  the  suit  is  brought, 
and  the  plaintiff  shall  have  judgment  for  the  principal  sum 
without  either  interest  or  cost.  The  court  in  which  said  suit  is 
]n-osecuted  shall  render  judgment  for  the  amount  of  interest  for- 
feits as  aforesaid  against  the  defendant,  in  favor  of  the  state 


344  THE    LAW    OF    INTEREST. 

of  Iowa  for  the  use  of  the  school  fund  of  said  county,  wliothor 
the  said  suit  is  contested  or  not ;  and  in  no  case  where  unhnvful 
interest  is  contracted  for,  shall  the  plaintiffiiave  judgment  for 
more  than  the  principal  sum,  whether  the  unlawful  interest  be 
incorporated  with  the  principal  or  not." — Ttev.  Code,^  20S0. 

"Nothing  in  this  chapter  shall  be  so  construed  as  to  prevent 
the  proper  "assiixnee,  in  good  faith  and  without  notice,  of  any 
jismioiis  contract,  recovering  against  tlie  usurer  the  full  amount 
of  the  consideration  paid  by  him  for  such  contract,  less  tlie 
amount  of  the  principal  money,  but  the  same  may  be  recovered 
of  the  usurer  in  the  proper  action  before  any  court  having  com- 
putfut  jurisdiction."— ii't'i'.  Code^  §  2081. 

KANSAS. 

Preminms  bid  for  priority  of  loan  in  building  and  saving  or 
trust  associations  organized  under  the  corporation  laws  of  Kan- 
sas, by  the  members  of  such  associations,  shall  not  l^e  deemed 
usinious,  etc. —  G.  S.,  §  1424. 

''Creditors  shall  be  allowed  to  receive  interest  at  the  rate  of 
six  percent,  pei- annum,  when  nootiier  rato  of  interest  is  agreed 
upon,  for  any  money  after  it  becomes  due;  for  money  lent  or 
money  due  on  settlement  of  account,  from  the  day  of  lirpiida- 
ting  tlie  same  and  ascertaining  the  balance  ;  for  money  received 
for  the  use  of  another,  and  retained  without  the  owner's  iiuow- 
ledge  of  the  receii)t;  for  money  due  and  withheld  by  an  un- 
reasonable and  vexatious  delay  of  payment  or  settlement  of 
accounts ;  for  all  other  money  due  and  to  become  due,  for  the 
forbearance  of  payment  whereof  an  express  promise  to  pay  in- 
terest has  been  made  ;  and  for  money  due  from  corporations  and 
individuals  to  their  day  or  monthly  employes,  from  and  after 
the  end  of  each  month,  when  the  same  shall  be  paid  within  (if- 
tceu  days  thereafter." — G.  6'.,  §  3497. 

"Tlie  parties  to  any  bond,  bill,  promissory  note  or  other  iri- 
strument  of  writing  for  the  payment  or  forbearance  of  mcney, 
may  stipulate  tiierein  for  interest  receivable  upon  the  amount 
of  such  i)ond,  bill,  note,  or  other  instrument  of  writing,  at  a 
rate  not  to  exceed, ten  per  cent,  per  annum  :  Provided,  that  any 
person  so  contrsctuig  for  a  greater  rale  of  interest  than  ten  per 
cent,  per  annum  shall  forfeit  all  interest  so  contracted  for  in  ex- 
cess of  such  ten  per  cent.;  and  in  addition  thereto  shall  forfeit 
a  sum  tf  money,  to  be  deducted  fi-oin  the  amount  due  for  prin- 
cipal raid  lawlid  interest,  equiil  to  the  amount  of  interest  con- 
tracted for  in  excess  of  ten  per  cent  per  annum." — G.  .b'.,  {5  .'llOS. 

"All  payments  of  money  or  [uoperty  made  by  way  of  usuri- 
ous iulcicbl  or  of  inUorscmcut  to  contract  fur  more  than  ten 


INTEREST    STATUTES.  345 

per  cent,  per  annum,  whether  made  in  advance  or  not,  shall  be 
deemed  and  taken  to  be  payments  made  on  account  of  the  prin- 
cipal and  ten  per  cent,  interest  per  annun),  and  the  courts  shall 
render  judgniL-iit  for  no  greater  sum  than  the  balance  found  due 
after  deducting  the  payments  of  money  or  property  made  as 
aforesaid  :  Provided^  that  no  bona  fide  indorsee  of  negotiable 
paper,  purchased  before  due  shall  be  affected  by  any  usury  ex- 
acted by  any  former  bolder  of  such  paper,  unless  he  shall  have' 
actual  notice  of  the  usury  previous  to  his  purchase.  But  double 
the  amount  of  such  excess  incorporated  into  negotiable  foaper, 
may,  in  such  cases,  after  payment,  be  recovered  back  by  action 
against  the  party  exacting  the  usuiy,  in  any  court  of  competent 
jurisdiction  :  Provided  further.  That  such  action  shall  be  l)iougbt 
within  ninety  days  from  the  maturity  of  such  paper." — G.  S.,  § 
3499. 

"  All  judgments  of  courts  of  record  and  justices  of  the  peace 
shall  bear  interest  from  the  day  on  which  they  are  rendered,  at 
the  rate  of  six  per  cent,  per  annum,  except  as  herein  otherwise 
provided."— (?.  S.,  §  3500. 

"When  a  rate  of  interest  is  specified  in  any  contract,  that  rate 
shall  continue  until  full  payment  is  made,  and  any  judgment  ren- 
dered on  any  such  contract  shall  bear  the  same  rate  of  interest 
mentioned  in  the  contract,  which  rate  shall  be  specified  in  the 
judgment;  but  in  no  case  shall  such  rate  exceed  ten  per  cent, 
per'^annu'ji,  and  any  bond,  note,  bill,  or  other  contract  for  the 
payment  of  money,  which  in  effect  provides  that  any  interest  or 
any  higher  rate  of  interest  shall  accrue  as- a  penalty  for  any  de- 
fault shall  be  void  as  to  any  such  provisions." — G.  S..,  §  3501. 

KENTUCKY. 

"If  any  bill  of  exchange,  drawn  on  any  person  out  of  the 
United  States,  shall  be  protested  for  non-payment  or  non-ac- 
ceptance, it  shall  bear  ten  per  cent,  per  year  interest  from  the 
day  of  protest,  but  not  longer  than  eighteen  months,  unless  pay- 
ment be  sooner  demanded^ from  the  party  to  be  charged,  or  un- 
less by  the  contract  a  rate  greater  than  six  per  cent,  is  stipu- 
lated for.  Such  interest  shall  be  recovered  to  the  time  of 
the  judgment,  and  the  judgment  shall  bear  six  per  cent,  inter- 
est therealter.  Damages'on  all  other  bills  are  disallowed." — 
G.  S.^ch.  22,  §10. 

"A  personal  representative,  after  the  expu-ation  of  two  years 
from  the  time  he  qualifies,  sliall  be  charged  with  interest  on 
the  surplus  assets  in  his  hands  from  that  period." — G.  S.,,  ch. 
39,  §  25. 

'•All  demands  against  the  estate  of  a  decedent  shall  be  ver- 
ified by  the  written  affidavit  of  the  claimant,  or  in  his  absence 


346  THE    LAW    OF    INTEREST. 

from  the  State  b}-  his  agent,  oi",  if  dead,  by  his  personal  repre- 
sentative, slating  that  the  demand  is  just,  and  has  never,  to  liis 
knowledge  or  belief,  been  paid,  and  tliat  there  is  no  ofifset  or 
discount  against  tlie  same,  or  any  usury  therein." — G.  S.,  ch. 
31),  §  35. 

"If  any  part  of  tiic  demand  lias  been  paid,  or  tliere  i)e  any 
offset  or  discount  against  the  same,  or  any  usury  therein,  the 
iillidavit  shall  state  the  amount  of  the  payment  or  usury,  when 
1  he  payment  was  made,  and  when  the  offset  or  discount  was 
(hie,  to  the  best  of  the  affiant's  knowledge  and  belief.  This 
verification  shall  not  be  held  to  dispense  with  other  proof 
of  the  demand,  as  required  by  law." — G.  S.,  ch.  39,  §  3G. 

'^Before  such  affidavit  is  made,  no  action  shall  be  brought, 
or  recovery  had,  on  any  such  demand,  nor  until  demand  of  pay- 
ment thereof  has  been  made  of  the  personal  representative,  ac- 
companied by  affidavit  of  its  justice." — G.  S.,  ch.  39,  §  37. 

"In  a  proceeding  to  coerce  a  claim  against  the  estate  of  a 
decedent,  his  personal  i-eprescntative  shall  have  the  right  to 
compel  the  attendance  of  the  claimant,  the  original  obligee,  or 
intermediate  assignors,  and  interrogate  any  of  them  touching 
the  usur\^  embraced  in  the  claim,  a  pa^-ment  of  all  or  a  part 
thereof,  or  of  the  existence  of  an  offset  or  discount  against  the 
same."— (?.  S.,  ch.  39,  §40. 

"No  personal  representative  shall  pay,  or  be  adjudged  to  pay, 
any  more  of  any  demand  against  the  decedent's  estate  than 
wiiat  remains  due  of  the  same  after  the  usury  embraced  therein, 
and  the  payments  made  thereon,  and  the  olTsets  and  discounts 
against  the  same,  are  deducted." — G.  iS.,  ch.  39,  §  41. 

"When  a  personal  representative  shall  pay  to  a  creditor  an 
undue  pioportion  of  his  demands,  or  to  a  distributee  a  part,  or 
all  of  his  share  or  legacy,  under  a  mistake  as  to  the  solvency 
of  the  estate  or  otherwise,  such  personal  representative  may 
recover  from  the  creditor,  distributee,  or  devisee,  the  amount 
of  the  over-payment,  with  interest  thereon." — G.  S.,  ch.  39, 
§  42. 

"No  interest  accruing  after  his  death  shall  be  allowed  or 
paid  on  any  claim  against  a  decedent's  estate,  unless  the  claim 
be  verified  and  authenticated  as  required  by  law,  and  demanded 
of  the  executor,  administrator,  or  curator,  within  one  year  af- 
ter his  api)ointment." — G.  S.,  ch.  39,  §  53. 

"When  the  heir  or  devisee  shall  alien,  before  suit  brought, 
the  estate  descended  or  devised,  he  shall  be  liable  for  the  value 
thereof,  with  legal  interest  from  the  time  of  alienation,  to  the 
creditors  of  the  decedent  or  testator;  but  the  estate  so  aliened 
sh:dl  not  be  lial)le  to  the  creditors,  in  the  hands  ol'  a  bona  fide 
purchaser  for  vuluable  consideration." — G.  »S'.,  ch.  44,  §  8. 


INTEREST    STATUTES.  347 

"If  no  time  is  fixed  for  the  payment  of  a,  specific  pecunituy 
legacy,  it  shall  be  payable  one  year  after  the  testator's  death, 
and  carry  interest  after  due." — G.  S.,  ch.  50,  art.  II,  §  2. 

"Legal  interest  shall  be  at  the  rate  of  six  dollars  upon  one 
hundred  dollars  for  one  year,  and  at  the"  same  rate  for  a 
greater  or  less  sum,  and  for  a  longer  or  shorter  time." — G.  S., 
ch.  60,  §  1.. 

"All  contracts  and  assurances  made,  directly  or  indirectly, 
for  the  loan  or  forbearance  of  money  or  other  thing  of  value  at 
a  greater  rate  than  legal  interest,  sliall  be  void  as  to  the  excess 
over  tlie  legal  interest." — G.  S.,  ch.  60,  §  2. 

"The  amount  loaned,  with  legal  interest,  may  be  recovered 
on  any  sucli  contract  or  assurance  ;  but  if  the  lender  refuse, 
before  suit  brought,  a  tender  of  the  principal,  with  legal  in- 
terest, he  shall  pay  the  costs  of  any  suit  brought  on  such  con- 
tract or  assurance." — G.  S.,  ch.  60,  p.  797,  §  3. 

"  A  court  of  equity  may  grant  relief  for  any  such  excess  of 
interest,  and  to  that  end  compel  the  necessary  discovery  from 
the  lender  or  forbearer."— (?.  S.,  ch.  60,  p.  799,  §  3. 

"Such  excess  of  interest  may  be  recovered  from  the  lender 
or  forbearer,  although  the  payment  thereof  was  made  to  his 
assignee." —  G.  S.,  ch.  60,  §  4. 

"  Partial  payment  on  a  debt  bearing  interest  shall  be  first 
applied  to  tlie  extinguishment  of  the  interest  then  due." —  G. 
S.,  ch.  GO,  §  5. 

"A  judgment  shall  bear  legal  interest  from  its  date.  A 
judgment  may  be  for  the  principal  and  accrued  interest;  but  if 
rentlered  for  accruing  interest,  it  shall  bear  interest  only  ac- 
cording to  its  terms." — G.  S.,  ch.  60,  §  6. 

"Any  indebtedness  incurred,  or  evidenced  by  judgment 
rendered  out  of  tlie  State,  shall  be  presumed,  unless  the  con- 
trary be  shown,  to  bear  liice  interest  as  if  it  had  been  incurred 
or  tiie  judgment  rendered  in  this  Commonwealth." —  G.  S.,  ch. 
60,  §  7. 

"  Rent  shall  bear  six  per  cent,  per  annum  interest  from  the 
time  it  is  due." —  G.  S.,  ch.  66,  art.  II  §  3. 

"  And  no  action  shall  be  prosecuted  in  any  of  the  courts  of 
tills  Commonwealt  1,  for  the  recovery  of  usury  heretofore  paid, 
for  the  loan  or  forbearance  of  money,  or  other  thing  against  the 
the  loaner  or  forbearer,  or  assignee,  or  either,  unless  the  same 
shall  have  been  instituted  witliin  one  year  next  after  tho 
payment  thereof;  and  this  limitation  shall  apply  to  all  pay- 
ments made  on  all  demands,  whether  evidenced  by  writing  or 
existing  in  parol." —  G.  S.,  ch.  71,  art.  Ill,  §  4. 

"Judgments,  when  given  against  the  defendants  in  the  cases 


348  THE    LAW    OF    INTEREST. 

referred  to  in  tlie  two  preceding  sections,^  shall  be  for  the 
principal  due,  with  interest  at  the  rate  of  ten  per  cent,  per 
annum  from  tiie  first  day  of  November  preceding  and  nntil 
paid."—  G.  S.,  ch.  92,  art.  XI,  §  6. 

LOUISIANA. 

"All  debts  shall  bear  interest  at  the  rate  of  five  ])er  cent, 
from  tlic  time  they  become  due,  unless  otherwise  stipulated." — 
Voorhie's  Rev.  Laivs^  §  1883. 

"  The  amount  of  conventional  interest  shall  in  no  case  exceed 
eight  per  cent.,  under  pain  of  forfeiture  of  the  entire  interest 
so  contracted."— F.'s  R.  L.,  %  1884. 

"  If  any  person  hereafter  shall  pay  on  any  contract  a  higher 
rate  of  interest  than  the  above,  as  discount  or  otherwise,  the 
same  may  be  sued  for  and  recovered  within  twelve  months 
from  the  time  of  such  payment." — V.'s  R.  i.,  §  1885. 

"  The  holder  of  any  circulating  note  which  may  have  been 
protested  for  non-payment  shall  be  entitled  to  damages  at  the 
rate  of  twelve  per  cent,  per  annum,  in  lien  of  interest,  until 
final  payment,  payable  out  of  the  general  fund  of  the  insolvent 
party."— F.'si^.  L.,  §1886. 

"  IJankers  and  banking  companies  shall  be  entitled  to  charge 
and  receive  discount  at  a  rate  not  greater  than  the  maximum 
allowed  bylaw  on  conventional  obligations;  and  their  other 
contracts  shall  be  regulated  by  the  laws  in  regard  to  interest 
upon  contracts  l)etween  individuals." — F.'.s  R.  L.,  §1887. 

Tutors  of  minors  are  liable  to  pay  their  pupils  legal  interest 
on  the  funds  which  thev  mav  have  failed  to  [jlace  at  interest  for 
their  use.— F.'.s  R.  L.^  §  1888. 

"  The  owner  of  any  promissory  note,  bond  or  written  obliga- 
tion for  the  payment  of  money,  to  order  or  bearer,  or  transfer- 
able by  assignment,  shall  have  the  right  to  collect  the  whole 
amount  of  such  promissory  notes,  bonds  or  written  obligations, 
notwithstanding  such  promissory  notes,  bonds  or  written  obli- 
gations may  include  a  greater  rate  of  interest  or  discount  than 
eight  per  cent,  per  annum  ;  provided,  such  obligations  shall  not 
bear  more  than  eight  per  cent,  interest  per  annum  after  their 
maturities  until  paid."— F.'s  R.  L.,  §  1889. 

"The  banking  institutions  of  the  State  of  Louisiana  be  and 
they  are  hereby  authorized  to  discount  paper  at  the  rate  of  eight 
per  cent,  per  annum  interest." — V.'s  R.  L.<,  §  1890. 

'  Sections  4  and  5,  uhicU  couipd  sbcrifl':)  and  others  to  pay  revenue 
into  the  treasury. 


INTEREST    STATUTES.  349 

ids. 


Tax  to  be  levied  by  state  to  pay  interest  due  on  state  bone 
■F.'s  E.  X.,  §3820. 


MAINE. 

"  The  rate  of  interest  upon  unpaid  state  and  county  taxes, 
and  taxes  assessed  by  county  commissioners  for  opening",  mak- 
ing, and  rei)airing  roads,  shall  be  twenty  per  cent.,  commenc- 
ing at  the  ex[)iration  of  one  year  from  the  date. of  the  assess- 
ments, except  when  otherwise  provided." — B.  S.,  ch.  6,  §  86. 

"Towns,  at  their  annual  meetings,  may  determine  when  the 
lists  named  in  section  ninety-seven^  shall  be  committed,  and 
when  their  taxes  shall  be  payable,  and  that  interest  shall  be 
collected  thereafter." — E.  S.,  ch.  6,  §  120. 

''  The  rate  of  such^  interest,  not  exceeding  one  per  cent,  a 
month,  shall  be  specified  in  the  vote,  and  shall  be  added  to,  and 
become  part  of  the  taxes." — li.  S.,  ch.  6,  §  121. 

"  The  person  interested  in  the  estate,  by  purchase  at  the 
sale,  may  pay  any  tax  assessed  thereon  before  or  after  that  so 
advertised,  and  for  which  the  estate  remains  lial)le,  and  on  fil- 
ing with  the  treasurer  the  receipt  of  the  officer  to  whom  it  was 
paid,  the  amount  so  paid  shall  be  added  to  that  for  which  the 
estate  was  liable,  and  shall  be  paid  by  the  owner  redeeming 
the  estate,  with  interest  at  the  same  rate  as  on  the  other  sums. 
After  the  deed  is  so  delivered,  the  owner  has  six  months  within 
which  to  redeem  his  estate,  by  paying  to  the  purchaser  the  sum 
by  him  so  paid,  with  interest  at  the  rate  of  twenty-five  per  cent, 
a  year."— J?.  S.,  ch.  6,  §  191. 

"  No  pawnbroker  shall  directly  or  indirectly  receive  a  rate  of 
interest  greater  than  twenty-five  per  cent,  a  year  on  a  loan  not 
exceeding  twenty-five  dollars,  nor  more  than  six  per  cent,  on  a 
larger  loan  made  upon  propert}^  pawned,  under  a  penalty  of 
one  hundred  doIlg,rs  for  each  offence." — Ji.  S.,  ch.  35,  §  3. 

"In  the  absentee  of  an  agreement  in  writing,  the  legal  rate  of 
interest  is  six  per  cent,  a  year." — R.  S.,  ch.  45,  §  1. 

"A  bank  may  allow  a  certain  rate  of  interest  for  deposits 
made  therein,  if  it  thinks  proper;  but  shall  not  issue  any  note, 
bill,  check  or  negotiable  security  payable  at  a  future  day,  or 
bearing  interest." — B.  S.,  ch.  47,  §  26. 

'•  No  bank  shall  take  a  greater  interest  or  discount  on  any 
note,  draft,  or  security,  tlian  at  the  rate  of  six  per  cent,  a  year, 
unless  by  agreement  in  writing,  whether  such  loan  is  made  in 
specie  or  otherwise,  or  an  agreement  is  made  to  pay  such  loan 

^  Of  the  town,  county  and  state  taxes. 
2  In  the  preceding  section. 


350  THE    LAW    OF    INTEREST. 

ill  specie  or  at  a  place  other  than  sucli  bank ;  bnt  such  interest 
or  tliscount  ma}'  be  taken  according  to  the  established  rnles  of 
banking  ;  anil  the  bank  in  disconnling  drafts,  l)ills  of  exchange 
or  other  negotiable  securities  i)a3'able  at  another  place,  may, 
in  addition  to  interest,  charge  the  existing  rale  of  excliange 
between  the  places  of  discount  and  pa3'ment." — li.  /S'.,  ch.  iT, 
§  31. 

One  year  is  allowed  receivers  of  banks  to  convert  the  assets 
into  money  and  "  All  claims  allowed  shall  bear  interest  from 
the  time  that  thc}'^  are  liled,  provided,  that  the  assets  in  the 
hands  of  the  receiver  are  more  than  sullicient  to  pay  the  princi- 
pal of  all  the  claims  allowed  and  outstanding  when  the  llnal 
dividend  is  declared." — R.  aS'.,  ch.  47,  §  GG. 

"  JS'o  deposit  shall  be  received  [by  savings  banks]  under  an 
agreement  to  pay  any  specified  sum  of  interest  for  its  use,  other 
than  the  regular  semi-annual  and  extra  dividends." — E.  S.,  ch. 
47,  §  107. 

"  A  railroad  corporation,  to  obtain  money  to  l)uild  or  furnish 
its  road,  or  to  pay  debts  contracted  for  that  purpose,  may 
issue  its  bonds  in  sums  not  less  than  one  hundred  dollars,  bear- 
ing interest,  secured  in  such  manner  as  it  deems  expedient,  aud 
binding  upon  it  although  sold  at  less  than  par  value  ;  and  no 
defence  of  usury  shall,  for  that  cause,  be  admitted." — li.  S.,  ch. 
51,  §oG. 

"  Interest  shall  be  cast  on  claims  [against  insolvent  estates] 
alloAved,  from  the  death  of  the  debtor  to  the  time  of  the  com- 
missiouers'  first  report,  unless  the  contract  otherwise  provides. 
At  the  expiration  of  the  time  limited,  the  commissioners  shall 
make  their  report  to  the  judge,  who,  before  ortlcring  distribu- 
tion, may  recommit  it  for  the  correction  of  any  error  api)earing 
to  him  to  exist." — Ji.  /S'.,  ch.  GG,  §  8. 

"  Interest  shall  be  allowed  on  verdicts  and  amounts  reported 
by  referees  to  be  due,  from  the  time  of  finding  such  verdicts  or 
making  such  reports,  to  the  time  of  judgment." — 7i'.  ;S.,  c7/.  77 
§54. 

In  warrants  of  distress,  on  judgments  legally  rendered  by 
tlie  county  commissioners,  "  Interest  on  the  daniages  shall  be 

included  and  collected  by  such  warrants  ;,s   in  executions  " 

li.  S.,  ch.  78,  §  18. 

"In  any  personal  action,  the  defendant  may,  in  writing 
entered  of  record  with  its  date,  offer  to  l)e  defaulted  for  a  si)eci- 
fied  sum.  If  accepted,  interest  may  be  added  from  that  date 
to  date  of  judgment." — /»'.  S.,  ch.  82,  <:!  25. 

'•  Interest  shall  be  allowed  on  the  amotnit  found  due  for 
damages  and  costs  in  actions  on  judgments  of  a  court  of 
rec(u-d."— 7i'.  ,S'..  ch.  82,  §  34. 


INTEREST    STATUTES.  351 

"  On  executions,  issued  on  judgments  or  acknowledgments 
of  debt,  interest  shall  be  collected  from  the  time  of  judgment, 
or  payment,  and  the  form  of  the  execution  be  varied  accord- 
ingly ""—i?.  ^.,  ch.  82,  §  142. 

"'  Jn  all  cases,  any  mill  or  building  seized  and  sold  on  execu- 
tion as  a  chattel  personal,  may  be  redeemed  within  one  year, 
as  land  levied  upon  by  appraisement  may  be  ;  and  the  remedies 
and  rights  of  the  parties  are  the  same  as  those  of  mortgagor 
and  mortgagee,  except  the  rate  of  interest,  which  shall  be  ten 
per  cent,  a  year." — li.  S.  ch.  84,  §  11. 

The  treasurer  of  the  hospital  for  the  insane  "shnll  charge 
and  collect  interest  on  all  debts  due  to  said  hospital,  for  boaixl 
and  clothino-  of  patients,  after  thirty  days  from  the  time  when 
they  become  due."— 72.  S.,  ch.  143,  §  22. 

Maine  has  no  usury  law  now,  the  usury  statute  that  had  been 
in  force  there  for  many  years  having  been  repealed  in  1870. 

MARYLAND. 

All  judgments  by  confession,  on  verdict,  or  by  default,  shall 
be  so  entered  as  to  carry  interest  from  the  time  they  ate  ren- 
dered."— G.  Laius,  art.  26,  §  16. 

"Interest  may  be  cliarged  or  deducted  at  the  rate  of  six  per 
centum  per  annum,  and  the  same  may  be  calculated  according  to 
tlie  standard  laid  down  in  Rowlett's  tables," — G.  Laios,  art.  49, 

§  1. 

"No  plea  of  usury  shall  be  available  against  any  legal  or 
equitable  assignee  or  holder  of  any  bond,  bill  obligatory,  bill 
of  exchange,  promissory  note,  or  other  negotiable  instrument, 
where  such  assignee  or  endorsee  or  holder  shall  Lave  received 
the  same  for  a  bona  fide  and  legal  consideration,  without  notice 
of  any  usury  in  the  creation  or  subsequent  assignment  thereof." 
G.  Laws,  art.  49,  §  2. 

"If  any  person  shall  exact,  directly  or  indirectly,  for  loan  of 
any  money,  goods  or  chattels,  to  be  paid  in  m(  ney  above  the 
value  of  six  dollars  for  the  forbearance  of  one  LundTcd  dollars 
for  one  year,  and  so  after  that  rate  for  a  greater  or  lesser  sum, 
or  for  a"  longer  or  shorter  time,  he  fchall  be  deemed  guilty  of 
usiu-y." — G.  Laivs,  art.  49,  §  3. 

"Any  person  guilty  of  usury  shall  forfeit  all  the  excess  above 
the  real  sum  or  value  of  the  goods  and  chattels  actually  lent  or 
advanced,  and  the  legal  interest  on  such  sum  or  value,  which 
forfeiture  shall  enure  to  the  benefit  of  any  deferdant  who  shall 
plead  usury  and  prove  the  same." — G.  Laws,  art.  49,  §  4. 

"Every  plea  of  usury  shall  state  the  sum  of  money  or  tie 
value  of  the  goods  or  chattels  lent  or  advanced,  with  the  time 


352  THE    LAW    OF    INTEREST. 

at  which  the  same  was  or  were  so  lent  or  advanced,  and  the 
phiiiitiff  shall  be  entitled  to  recover  the  sum  of  money  or  the 
value  of  the  goods  and  chattels  actually  lent  or  advanced,  with 
legal  interest  from  the  time  the  same  was  so  lent  or  advanced." 
— G.  Laws,  art.  49,  §  5. 

"Nothing  in  the  preceding  sections  of  this  article  sliall  be  so 
construed  as  to  make  usury  a  cause  of  action  in  any  case  when 
the  bond,  bill  ol)ligatory,  promissory  note,  bill  of  excliange,  or 
other  evidence  of  indebtedness,  has  been  redeemed  or  settled 
for  by  the  obligor  or  obligors,  in  money  or  other  valuable  con- 
sideration, except  that  of  a  renewal  in  whole  or  in  part  of  the 
original  indebtedness." — G.  Laics,  art.  49,  §  6. 

MASSACHUSETTS. 

"When  a  city  or  town  has  fixed  a  time  within  which  taxes 
assessed  therein  shall  be  paid,  such  city  by  its  city  council,  and 
such  town  at  the  meeting  vv hen  money  is  appropriated  or  raised, 
may  vote  that,  on  all  taxes  remaining  unpaid  after  a  certain 
time,  interest  shall  be  paid  at  a  specified  rate,  not  exceeding 
seven  per  cent  per  annum  ;  and  may  also  vote  that,  on  all  taxes 
remaining  unpaid  after  another  certain  time,  interest  shall  1  e 
paid  at  another  si)ecified  rate,  not  exceeding  seven  per  cent 
per  annum  ;  and  the  interest  accruing  under  such  vote  or  votes 
shall  be  added  to,  and  be  a  part  (jf  such  taxes." — P.  S..,  ch.  11, 
§67. 

"The  legal  voters  of  any  fire,  water-supply,  improvement,  or 
school  district,  organized  under  the  laws  of  the  connnonwcalth, 
may,  at  the  meeting  when  money  is  appropriated  or  raised, 
fix  a  tiwe  within  which  all  tttxes  assessed  therein  shall  be  paid, 
and  may  vote  that,  on  all  taxes  remaining  unpaid  after  a  cer- 
tain time,  interest  shall  be  paid  at  a  specified  rate,  not  exceed- 
ing one  per  cent  per  month,  and  may  also  vote  that,  on  all  taxes 
remaining  unpaid  alter  another  certain  time,  interest  shall  be 
paid  at  another  specified  rate,  not  exceeding  one  per  cent  per 
month  ;  and  the  interest  accruing  under  such  vote  or  votes  shall 
be  added  to  and  be  a  part  of  such  taxes." — P.  S.,  ch.  11,  §  G8. 

Taxes  assessed  on  corporations  whether  assessed  before  or 
after  the  tenth  day  of  December  "shall  bear  interest  at  the  rate  cf 
twelve  per  cent  per  annum  from  that  date  until  they  aie  paid." 
-  P.  S.,  ch.  13,  §  35. 

"In  all  cases  where  a  time  is  fixed  for  the  payment  of  mon- 
eys due  to  a  count}-,  the  persons,  cities,  towns,  or  corporations 
from  whom  such  moneys  are  due  shall  pay  interest  to  the  county 
at  the  rate  of  twelve  per  cent  i)er  annum  fr r  the  period  which 
may  elapse  after  such  time  until  the  time  of  payment :  provided, 


INTEREST  STATUTES.  353 

that  notice  is  given  by  the  county  treasurer  to  such  debtors 
seven  days  at  least  previous  to  the  time  fixed  for  such  payment. 
All  interest  received  from  such  debtors  shall  be  paid  into  the 
county  treasury." — P.  S.,  cli.  23,  §  19. 

"A  town  making  such  purchase^  may  issue,  in  payment  there- 
for, bonds,  bearing  interest  at  a  rate  not  exceeding  seven  per 
cent,  payable  senn-annually,  and  redeemable  at  a  time  not  ex- 
ceeding twenty  years  from  their  date;  and  may,  for  the  pur- 
pose of  purchasing  materials,  laying  pipes,  and  doing  other 
work  necessary  for  so  supplying  water,  issue  additional  similar 
bends;  and  a  town  making  sucli  contract  as  aforesaid  may,  for 
the  purpose  named  in  this  section,  issue  similar  bonds." — P. 
aS.,  ch.  27,  §  28. 

''Where  there  is  eo  agreement  for  a  different  rate,  the  interest 
of  money  shall  be  at  the  rate  of  six  dollars  upon  each  hundred 
dollars  for  a  year,  but  it  shall  be  lawful  to  pa}-,  reserve,  or  con- 
tract for  any  rate  of  interest  or  of  discount ;  but  no  greater  rate 
than  that  before  mentioned  shall  be  recovered  in  any  action, 
unless  the  agreement  to  pay  such  greater  rate  is  in  writing,  and 
no  bond  issued  by  a  corporation  shall  bear  interest  at  a  yearly 
rate  exceeding  seven  dollars  on  each  hundred." — P.  S.,  ch.  77, 
§3. 

"When  a  bill  of  exchange,  drawn  or  indorsed  within  the  com- 
monwealth and  payable  beyond  the  limits  of  the  United  States, 
is  duly  protested  for  non-acceptance  or  non-payment,  the  party 
liable  for  the  contents  of  such  bill  shall,  on  due  notice  and  de- 
mand thereof,  pay  such  contents  at  the  current  rate  of  exchange 
at  the  time  of  the  demand,  and  damages  at  the  rate  of  five  per 
cent  upon  such  contents,  together  with  interest  on  the  contents 
to  be  computed  from  tiie  date  of  the  protf  st ;  and  said  amount 
of  contents,  damages,  and  interest  sliall  be  in  full  of  all  dama- 
ges, charges,  and  expenses." — P.  S.,  ch.  77,  §  18. 

"In  an  action  on  a  contract,  other  than  a  bill  of  exchange, 
for  the  payment  of  money  beyond  the  limits  of  the  United  States, 
the  debt  or  damages  recovered  by  tlie  creditor  sliall  be  deter- 
mined by  the  current  rate  of  exchange  at  the  time  when  such 
contract  falls  due,  and  to  such  amount  interest  from  such  time 
shall  be  added."— P.  S.,ch.  77,  §  19. 

"The  board  of  officers  licensing  pawnbrokers  in  any  place 
may  fix  the  rate  of  interest  which  such  pawnbrokers  may  re- 
ceive on  loans,  and  may  fix  diflferent  rates  which  may  be  received 
for  different  amounts  of  money  lent ;  and  no  licensed  pawnbro- 

•  Of  a  corporalioc  the  right  to  take  watci  to  supply  the  inhabitants 
of  the  town. 


354  THE    LAW    OF    INTEREST. 

ker  shall  charge  or  receive  a,  greater  rate  of  interest  than  that, 
so  fixed.  Any  such  pawnbrolvcr  who  violates  any  provision  ot' 
this  or  tiie  preceding  section  shall  be  punished  liy  fine  not  ex- 
ceeding llftv  ilollars  for  each  olfence." — P.  »S'.,  ch.  102,  §  34. 

Railroad  l)onds  are  to  hear  "interest  not  exceeding  seven  per 
cent  a  year,  payable  annually  or  semi-annually." — P.  S  ,  ch. 
112,  §  62. 

Savings  banks  and  institutions  for  savings  "may  receive  de- 
posits  from  any  i)erson  until  they  asnount  to  one  thousand  dol- 
lars; and  may  allow  interest  ui)on  such  deposits,  and  upon  the 
interest  accumulated  thereon,  until  the  principal,  with  the  ac- 
crued interest,  amounts  to  sixteen  hundred  dollars;  and  there- 
after upon  no  greater  sum  than  sixteen  hundred  dollars;  but 
the  limitations  contained  in  this  section  shall  not  api)ly  to  de- 
posits by  religious  or  charitable  cor[)orations,  or  to  de[K)sits^ 
made  b}'  direction  of  a  prol)ate  courtby  virtue  of  the  sixteenth 
section  (jf  the  one  hundred  and  forty-fourth  chapter  of  the  Pub- 
lic Statutes."—  P.  S.,  ch.  IIG,  §  I'J  ;  Acts  of  1889,  ch.  86. 

"Xo  bank  shall  make  or  issue  a  note,  hill,  check,  draft,  ac- 
ceptance, certificate,  or  contract,  in  any  form  whatever,  for  the 
[)aymcnt  of  money  at  a  future  day  certain  or  with  interest,  ex- 
cei)t  for  money  borrowed  of  the  commonwealth  or  of  an  institu- 
tion for  savings  incorporated  under  authority  of  the  common- 
wealth, or  money  ~  deposited  l)y  an  assignee  as  provided  in 
section  fifty-three  of  chapter  one  hundred  and  fift3'-seven  ;  and 
except  also  that  all  debts  due  t)  one  bank  from  another,  includ- 
ing bills  of  the  bank  indebted,  ma}'  draw  interest ;  and  banks 
may  contract  with  cities  and  towns  in  this  commonwealth  for  the 
payment  or  receipt  of  interest,  upon  an  account  current  of 
m(^nev  deposited  with  and  drawn  from  them  by  said  cities  and 
towns."— P.  S.,  ch.  118,  §  40. 

"When  judgment  is  made  up  upon  an  award  of  county  com- 
missioners, a  committee,  or  referees,  or  on  the  report  of  an  aud- 
itor or  master  in  chancery,  or  on  a  verdict  of  a  jury,  interest 
shall  be  computed  u[)on  the  amount  of  the  award,  report,  or 
verdict,  from  the  time  when  made  to  the  time  of  making  up  the 
judgment.  Every  judgment  for  the  payment  of  money  shall 
bear  interest  from  the  day  of  the  rendition  thereof.  The  war- 
rantor execution  issued  on  a  judgment  for  the  payment  of  money 
shall  specify  the  day  upon  which  judgment  is  rendered,  and  shall 
require  the  collection  or  satisfaction  thereof  with  interest  from 
the  day  of  its  rendition." —  7'.  6'.,  ch.  171,  §  «. 

'  Of  money  unclaimed  six  months  after  decree  of  distributlou. 
^  The  assets  of  the  estate. 


INTEREST    STATUTES.  355 

"When  it  appears  to  the  court  [in  a  suit  for  the  redemption 
of  a  mortgage]  that  tlie  mortgagee  has  not  unreasonably  neg- 
lected or  refused  to  render  a  true  account  of  the  rents  and  profits 
of  the  mortgaged  estate,  the  court  may  award  to  him  the  bal- 
ance found  due  on  the  mortgage,  with  interest  thereon  at  a  rate 
not  exceeding  twelve  per  cent  a  year  from  the  expiration  of  three 
years  after  such  entry  to  the  time  of  renderingjudgment  in  the 
suit."—  P.  S.,  ch.  181,  §34. 

"The  clause  [in  the  statutory  form  of  recognizance  for  debt] 
as  to  the  payment  of  interest  ma}^  be  altered  or  wholly  omitted 
according  to  the  agreement  of  the  parties;  but  interest  shall  al- 
ways be  allowed  for  any  delay  after  the  time  of  payment,  unless 
the  recognizance  contains  an  express  agreement  to  the  contrary." 
—  P.  S.,  ch.  193,  §  3. 

"Jf  upon  the  liearing  of  an  appeal  or  exceptions  by  the  full 
[su[)reme  judicial]  court,  whether  in  an  action  at  law  or  suit  in 
equity  or  other  proceeding,  it  appears  that  the  appeal  or  excep- 
tions are  frivolous,  innnaterial,  or  intended  for  delay,  the  court 
ma}',  either  upon  motion  or  without  any  motion  theielbr,  award 
against  the  appellant  or  party  taking  exceptions  double  costs 
from  the  time  when  the  appeal  or  exceptions  were  taken,  and 
interest  from  the  same  time  at  the  rate  of  twelve  per  cent,  by 
the  year  on  any  sum  which  has  been  found  due  for  debtor  dam- 
ages, or  which  he  has  been  ordered  to  pa}',  or  for  which  judgment 
has  been  recovered  against  hin^,  or  the  court  may  award  any  part 
of  such  additional  costs  and  interest." — Acts  o/1883,  ch.  223, 
§  15. 

"All  assessments  on  account  of  betterments  and  other  public 
impiovements  which  are  a  lien  upon  real  estate  shall  bear  inter- 
est from  the  thirtieth  day  after  assessment,  until  paid." — Acts 
of  1884,  ch.  237. 

"  \V  hen  judgment  is  rendered  upon  any  such  complaint  against 
a  corporation,^  the  court  may  issue  a  warrant  of  distress  to  com- 
pel the  payment  of  the  penalty  prescribed  by  law,  together  with 
costs  and  interest."- — Acts  0/I886,  ch.  87,  §  4. 

"A  special  partner  [in  a  limited  partnership]  may  withdraw 
interest  on  the  capital  contributed  by  him  at  any  rate  agreed  on 
not  exceeding  six  per  cent,  per  annum,  provided  that  such  with- 
drawal is  out  of  profits  and  does  not  impair  the  capital  of  the 
partnership,  without  any  liability  to  refund  the  same  in  any 
event."—  Acts  of  1887,  ch.  248,  §  2. 

*'A11  sums  of  money  hereafter  deposited  in  savings  banks, 
institutions  for  savings  or  trust  companies  in  the  name  of  a  judo-e 

*  For  not  paying  wages  weekly. 


356  THE    LAW    OF    INTEREST. 

of  probate  court,  as  trustee,  or  by  order  of  any  court,  shall  draw 
interest  or  dividends  at  the  same  rate  as  otlier  deposits  in  the 
same  bank,  institution  or  company,  while  they  remain  therein 
without  regard  to  the  amount  deposited." — Acts  of  1889,  c/i. 

449,  §  1. 

'•The  probate  court,  court  of  insolvency  or  other  court,  re- 
spectivelv,  shall,  upon  the  application  of  any  person  interested 
or  of  the  attorney-general  and  after  such  public  notice  as  the 
court  or  any  judge  or  justice  thereof  may  deem  proper  to  be 
uivcn,  order  and  decree  that  all  sums  of  money  heretofore  or 
hereafter  deposited  in  a  savings  bank,  institution  for  savings  or 
trust  company,  by  authority  of  either  of  said  courts  or  any 
judge  or  justice  thereof,  and  which  shall  haveremainetl  unclaimed 
for'a  p.eriod  of  more  than  five  years  from  the  dale  of  such  de- 
posit, with  the  increase  and  proceeds  thereof,  to  be  paid  to  the 
treasurer  of  the  Commonwealth,  to  be  held  and  used  by  him, 
according  to  law,  subject  for  fifteen  years  only  to  be  paid  with 
interest  at  the  rate  of  three  per  cent,  per  annum  from  tlic  time 
it  is  so  paid  to  said  treasurer  to  the  time  it  is  paid  by  him  to 
the  person  or  persons  having,  and  established,  a  lawful  rig-ht 
thereto."— ^c/s  of  1889,  ch.  449,  §  2. 

"Interest,  whether  arising  as  damages  for  the  detention  of 
money  or  otherwise,  may  be  declared  on,  in  addition  to  the  forms 
of  pleading  now  authorized  by  law,  by  including  in  any  court 
wliich  is  followed  by  an  account  annexed,  or  bill  of  particulars, 
the  words  'and  interest,'  and  setting  fortii  as  an  item  in  the  ac- 
count annexed  or  bill  of  particulars  the  times  and  amounts  n)r 
and  upon  which  interest  is  claimed,  and  the  amount  of  interest 
so  claimed."—  Ads  o/1890,  ch.  398. 

"All  loans  hereafter  contracted,  for  less  than  one  thousand 
dollars,  shall  be  dischargeable  by  the  debtor  upon  payment  or 
tender  of  the  principal  sum  actually  borrowed  and  interest  at 
tlie  rate  of  eighteen  per  centum  per  annum,  from  the  time  said 
money  was  borrowed,  together  with  a  sum,  for  the  actual  ex- 
penses of  making  the  loan  and  securing  the  same,  not  exceed- 
ing five  dollars,  provided  that  the  lender  shall  be  entitled  to  in- 
terest for  six  months  at  said  rate  when  the  debt  is  paid  before 
the  expiration  of  that  period.  And  all  payments  in  excess  of 
said  rate  shall  be  applied  to  the  discharge  of  the  principal  and 
the  borrower  shall  oidy  be  obliged  to  pay  or  tender  the  balance 
of  the  principal  and  interest,  at  said  rate,  due  after  such  ap- 
plication. All  acts  and  parts  of  acts  inconsistent  herewith  are 
hereby  repealed  :  provided,  that  nothing  in  this  act  shall  be 
construed  to  affect  any  loan  made  at  a  less  rate  than  at  the  rate 
of  eighteen  per  centum  per  annum,  nor  shall  it  be  construed  to 


INTEREST    STATUTES.  357 

repeal  so  much  of  section  three  of  chapter  seventy-seven  of 
the  Public  Statutes  as  provides  that  when  there  is  no  agree- 
ment for  a  different  rate  the  interest  of  money  shall  be  at  tlie 
rate  of  six  dollars  upon  each  hundred  dollars  for  a  year." — 
Acts  of  1892,  ch.  428,  §  1.  If  the  security  is  household  furni- 
ture, and  the  loan  less  than  a  thousand  dollars,  and  at  or  more 
than  eighteen  per  cent,  interest,  the  mortgage  must  state  the 
amount  of  the  loan,  rate  of  interest,  etc.  Tiiis  act  does  not 
apply  to  licensed  pawnbrokers,  and  it  does  not  affect  Public 
Statutes,  ch.  102,  §  34. 


MICHIGAN. 

"In  any  action  brought  on  any  bill  of  exchange,  or  promis- 
sory note  payable  in  money,  and  to  order  or  bearer,  originally 
given  or  made  for,  or  upon  any  usurious  consideration  or  con- 
tract, if  it  shall  appear  that  the  plaintiff  became,  in  good  faith, 
the  indorsee  or  holder  of  such  bill  of  exchange  or  promissory 
note,  for  a  valuable  consideration,  before  the  same  became  due, 
then  and  in  such  case,  unless  it  shall  further  appear  that  the 
plaintiff,  at  the  time  of  becoming  such  indorsee  or  holder,  bad 
actual  notice  that  such  bill  or  note  was  given  for,  or  upon  a 
usurious  consideration  or  contract,  he  shall  be  entitled  to  re- 
cover thereon,  in  the  same  manner,  and  to  the  same  extent, 
as  if  such  usury  had  not  been  alleged  and  proved." — H.'s  A. 
S.,  §  loU6. 

"Interest  may  be  allowed  and  received  upon  all  judgments 
at  law,  for  the  recovery  of  any  sums  of  money,  and  upon  all  de- 
crees in  chancery  for  the  payment  of  any  sums  of  money,  what- 
ever may  be  the  form  or  cause  of  action  or  suit  in  which  such 
judgment  or  decree  shall  be  rendered  or  made ;  and  such  in- 
terest may  be  collected  on  execution,  at  the  rate  of  seven  per 
centum  per  annum  :  Piovided^  that  on  a  judgment  rendered  on 
any  written  instrument,  having  a  different  rate,  the  interest 
shall  be  computed  at  the  rate  specified  in  such  instrument,  not 
exceeding  ten  per  centum." — H.'s  A.  S.,  §  1597. 

"In  all  actions  founded  on  contracts  express  or  implied, 
whenever  in  the  execution  thereof  any  amount  in  money  shall 
be  liquidated  or  ascertained  in  favor  of  either  party,  by  ver- 
dict, report  of  referees,  award  of  arbitrators,  or  by  any  other 
mode  of  assessment  according  to  law,  it  shall  be  lawful,  un- 
less such  verdict,  report,  award,  or  assessment  shall  be  set 
aside,  to  allow  and  receive  interest  upon  such  amount  so  as- 
certained or  liquidated,  until  payment  thereof,  or  until  judg- 
ment shall  be  thereupon  rendered  ;  and  in  making  up  and  re- 


358  THE   LAW    OF   INTEREST. 

conliiifT  such  judgment,  tlic  interest  on  such  amount  shall  be 
added  thereto,  and  inchuled  in  the  judgment." — II/s  A.  /S., 
§  1598. 

"When  any  instalhnent  of  interest  upon  any  note,  l)ond, 
niortscf^^'e,  or  other  written  contract,  sliall  liave  become  (Uie, 
and  fhe  same  shall  remain  unpaid,  interest  may  be  computed 
and  collected  on  any  such  installment  so  due  and  unpaid,  from 
the  time  at  which  it  became  due,  at  the  same  rate  as  specified 
ill  any  such  note,  bond,  mortgage,  or  other  written  contract, 
not  exceeding  ten  per  cent.  ;  and  if  no  rate  of  interest  be  spec- 
ified in  sucli  instrument,  then  at  the  rate  of  seven  per  centum 
per  annum." — 7/.'s  A.  S.,  §  1599. 

"It  shall  be  lawful  for  any  person  or  corporation,  borrowing 
money  in  this  state,  to  make  notes,  bills,  bonds,  drafts,  accept- 
ances, mortgages,  or  other  securities,  for  the  payment  of  prin- 
cipal or  interest,  at  tlie  rates  authorized  by  the  laws  of  ihis 
state,  payable  at  the  place  where  the  parties  may  agree,  al- 
though the  legal  rate  of  interest  in  such  place  may  be  less  tlian 
iii  this  state  ;  and  such  notes,  bonds,  bills,  drafts,  or  other  se- 
curities, shall  not  be  regarded  or  held  to  be  usurious,  nor  shall 
any  securities  taken  for  the  same,  or  upon  such  loans,  be  in- 
validated in  consequence  of  the  rate  of  interest  of  the  state, 
kingdom  or  country,  where  the  i)ai)er  is  made  payal)le,  being 
less  tiian  in  this  state,  nor  of  any  usury  or  penal  law  therein." 
—H.'sA.  S.,  §1600. 

"No  plea  of  usury,  nor  defense  founded  upon  an  allegation 
of  usury,  shall  be  sustained  in  any  court  in  this  state,  nor  shall 
any  security  be  held  invalid  on  an  allegation  of  usury,  when 
the  rate  of  interest  reserved,  discounted  or  taken,  does  not  ex- 
ceed that  allowed  by  the  laws  of  this  state,  in  consequence  of 
such  security  being  payable  in  a  state,  kingdom  or  country, 
where  such  rate  of  interest  is  not  allowed." — H.'s  A.  S.^^ldOl. 

"It  8hall  be  lawful  for  all  oarties  loaning  money  in  this 
state,  to  take,  reserve  or  discount  interest  upon  any  note,  bond, 
bill,  draft,  acceptance,  or  other  commercial  paper,  mortgage, 
or  other  security,  at  any  rate  authorized  by  the  laws  of  this 
state,  whether  sucii  pa[)er  or  securities,  for  principal  or  inter- 
est, be  payal)le,  in  this  state,  or  in  any  other  state,  kingdom 
or  country,  without  regard  to  the  laws  of  any  other  state, 
kingdom  or  country  ;  and  all  such  notes,  bonds,  bills,  drafts, 
acceptance,  or  other  connnercial  i)aper,  mortgages  or  other  se- 
curit}',  shall  be  held  valid  in  this  state,  whether  the  parties  to 
the  same  reside  in  this  state  or  elsewhere."  —  II.'s  A.  S., 
§  1602. 

"When  any  contract  or  loan  shall  be  made  in  this  state,  or 


INTEREST    STATUTES.  359 

between  citizens  of  this  state  and  an}'  other  state  or  country,  bear- 
ing interest  at  any  rate  which  was  or  shall  be  lawful  according  to 
any  law  of  the  state  of  Michigan,  it  shall  and  may  be  lawful  to 
make  the  amount  of  i)rincipal  andinterestof  such  contract  or  loan 
payable  in  anj'  other  state  or  territory  of  the  United  States,  or  in 
England  ;  and  in  all  such  cases,  such  contract  or  loan  shall  be 
deemed  and  considered  as  governed  by  the  laws  of  the  state  of 
Michigan,  and  shall  not  be  affected  by  the  laws  of  the  state  or 
country  -\\  here  the  same  shall  be  made  pa^^able  ;  and  no  con- 
tract or  loan,  which  may  liave  heretofore  been  made  or  entered 
into,  in  this  state,  or  between  citizens  of  this  state  and  of  any 
other  country,  bearing  interest  at  a  rate  which  was  legal  accord- 
ing to  the  laws  of  this  state  at  the  time  when  the  same  was 
made  or  entered  into,  shall  be  invalidated  or  in  anywise  im- 
paired or  affected  by  reason  of  the  same  having  been  made  pay- 
able in  any  other  state  or  country." — H.'s  A.  S.,  §  1603. 

Land  sold  for  taxes  may  be  redeemed  by  paying  "  interest 
thereon  at  the  rate  of  twenty  per  cent,  per  annum"  from  the 
date  of  the  certificate  of  sale.— ^.'s^.  S.,  §  3015.1 

"•  It  shall  not  be  lawf id  for  any  such  association^  to  take  or 
receive  more  than  the  legal  rate  of  interest,  in  advance  on  its 
loans  and  discounts." — H.'s  A.  S.,  ^  3138. 

"It  shall  be  the  duty  of  the  board  of  directors  or  trustees  [of 
savings  banks],  from  time  to  time,  to  regulate  the  rate  of  interest 
to  be  allowed  to  depositors,  and  pay  the  same  at  regular  and 
stated  periods."— H.'s  A.  S.,  §  3202. 

Savings  associations  mny  "receive  deposits  of  money  and 
pay  interest  on  the  same  at  such  rates  as  shall  be  agreed  upon, 
but  in  no  case  exceeding  seven  per  cent,  per  annum." — H.'s  A. 
S..  §  3215.  So  of  money  loaning  and  investing  societies. — Ibid., 
§3254.  Borrowers  in  the  last-named  societies  may  pay  their 
loans  in  instalments  by  pacing  not  over  ten  per  cent  interest. 
—IbkL,  §  3260. 

"When  execution  shall  be  issued  upon  any  judgment,  in- 
terest on  the  amount  of  the  judgment,  from  the  time  of  entry 
of  the  same  until  such  amount  shall  be  paid,  shall  be  collected 
thereon."— H.'s  A.  S.,  §  7672. 

"  If  it  shall  appear  upon  the  trial  of  the  cause,  or  upon  the 
assessment  of  damages,  that  the  amount  so  tendered^  was  suf- 
ficient to  pay  the  plaintiff's  demand,  or  was  a  sufficient  amends 
for  the  injury  done,  and  the  costs  of  the  suit  or  proceeding  up 

1  See  act  of  1889  below. 

3  rrovided  for  by  §  7764. 


360  THE    LAW    OF    INTEREST. 

1o  the  time  of  such  tender,  the  plaintiff  shall  not  be  entitled  to 
recover  or  colh'ct  any  interest  on  such  demand  from  the  time  of 
such  tender,  or  any  costs  incurred  subsequent  to  tliat  tinie,  but 
shall  be  liable  to  the  defendant  for  the  costs  incurred  by  him 
subsequent  to  such  time." — H.'s  A.  S.,  §  77H5. 

'•  ^Vhen  judgment  shall  be  rendered  against  any  incorporated 
l)ank,  for  the  amount  of  any  bills  or  other  evidences  of  debt, 
l)ayable  absolutely,  the  payment  of  uhich  shall  have  been  re- 
lused  by  such  bank,  and  no  measure  of  damages  shall  be  spoci- 
tied  in  the  act  incorporating  such  bank,  the  plaintiff  shall 
recover  interest  on  such  amount  from  the  time  of  such  refusal, 
at  the  rate  of  ten  per  cent,  a  year,  instead  of  the  rate  estab- 
lished by  law."— J/.'s  A.  S.,  §  8139. 

To  all  unpaid  taxes  shall  be  added  interest  at  the  rate  of  one 
per  cent,  for  every  month  or  part  of  a  month  during 'svhich  such 
taxes  remain  unpaid. — Acts  o/lS89,  JS'o.  195,  §  74. 

"■  The  interest  of  money  shall  be  at  the  rate  of  six  dollars 
upon  one  hundred  dollars  for  a  year,  and  at  the  same  rate  for  a 
greater  or  less  sum,  and  for  a  longer  or  shorter  time,  except 
that  in  all  cases,  it  shall  be  lawful  for  the  parties  to  stipulate 
in  writing,  for  the  payment  of  any  rate  of  interest  not  exceed- 
ing eight  per  cent,  per  annum  :  P')Ovidecl,  That  this  act  shall 
not  apply  to  existing  contracts  whether  the  same  be  either  (luo. 
not  due,  or  post  due."— Acts  o/1891,  Ko.  156,  §  1. 

"No  bond,  1)111,  note,  contiact  or  assurance,  mr.de  or  given 
for  or  upon  a  consideration  or  contract,  whereby  or  whereon  a 
greater  rate  of  interest  has  been,  directly  or  indirectly,  taken 
or  received,  than  is  allowed  by  law  shall  be  thereby  rendered 
void  ;  but  in  any  action  brought  by  any  person  on  such  usuiious 
contract  or  assurance,  except  as  is  provided  in  the  following 
section,  if  it  shall  appear  that  a  greater  rate  of  interest  has  been, 
directly  or  indirectly,  reserved,  taken  or  received,  than  is  al- 
lowed by  law,  the  defendant  shall  not  be  compelled  to  pay  any 
interest^hereon." — Acts  o/1891,  Ko.  156,  §  2. 

"Whenever  it  shall  satisfactorily  ajipearby  the  admission  of 
the  defendant,  or  by  proof  that  any  bond,  bill,  note,  assurance, 
pledire,  conveyance,  contract,  security,  or  any  evidence  of  debt 
lias  been  taken  or  received  in  violation  uf  this  act,  the  court 
shall  declare  the  interest  thereon  to  be  void." — Acts  of  ISdl, 
No.  150,  §  3. 

MINNESOTA. 

"The  interest  for  any  legal  indebtedness  shall  be  at  the  rate 
of  seven  (7)  dollars  upon  one  hundred  (100)  dollars  for  a  year, 
unless  a  dilferent  rate  is  contracted  for  in   writing,   and   no 


INTEREST    STATUTES.  361 

person,  company,  or  corporation  shall  directly  or  indirectly 
take  or  receive  in  money,  goods  or  things  in  action  or  in  any 
other  way,  any  greater  snni  or  any  greater  value  for  the  loan 
or  forbearance  of  money,  goods,  or  things  in  action  than  ten 
(10)  dollars  on  one  hundred  (100)  dollars  for  one  year.  And  in 
the  computation  of  interest  npon  any  bond,  note  or  other  in- 
strument or  agreement,  interest  shall  not  be  compounded.  But 
any  contract  to  pay  interest  not  usurious  upon  interest  overdue 
shall  not  be  construed  to  be  usury.  Provided,  that  all  contracts 
hereafter  made  shall  bear  the  same  rate  of  interest  after  they 
become  due  as  before,  and  that  any  provision  in  any  contract, 
note  or  instrument  providing  for  an  increase  of  the  rate  of 
interest  npon  maturity  or  any  increase  therein  after  the  making 
and  delivery  thereof,  shall  work  a  forfeiture  of  the  entire  in- 
terest thereon.  Provided,  further,  that  the  foregoing  proviso 
shall  not  ai)ply  to  notes  or  contracts  which  bear  no  interest 
before  maturity."—  G.  S.,  §  2089. 

"  Every  person  who  for  any  such  loan  or  forbearance  shall 
have  paid  or  delivered  an}'  greater  sum  or  value  than  is  above 
allowed  to  be  received,  may  by  himself  or  his  personal  repre- 
sentatives, recover  in  an  action  against  the  person  who  shall 
have  taken  or  receive(>  the  same,  or  his  personal  representatives, 
the  full  amount  of  interest  or  premium  so  paid,  with  costs,  if 
such  action  shall  be  brought  within  two  (2)  years  after  such 
payment  or  delivery  :  Provided,  that  one-half  of  the  amount  so 
recovered  shall  be  paid  by  the  officer  collecting  the  same  into 
the  county  treasury  of  the  county  where  such  penalty  is  col- 
lected for  the  use  of  the  common  schools." —  G.  S.,  §  2090. 

"All  bonds,  bills,  notes,  assurances,  conveyances,  chattel 
mortgages,  and  all  other  contracts  and  securities  whatsoever, 
and  all  deposits  of  goods,  or  anything  whatever,  whereupon  or 
whereby  there  shall  be  reserved,  secured,  or  taken  any  greater 
sum  or  value  for  the  loan  or  forbearance  of  any  money,  goods, 
or  things  in  action,  than  is  above  prescribed,  shall  be  void, 
except  as  to  the  bona  fide  purchas^ers  of  negotiable  paper  as 
hereinafter  provided  in  good  faith,  for  a  valuable  consideration 
before  maturity.  Provided,  that  no  merely  clerical  error  in  the 
computation  of  interest  made  vvith  no  intent  to  avoid  the  pro- 
visions of  this  act  shall  constitute  usury.  Provided  further, 
that  interest  at  the  rate  of  one-twelfth  of  ten  per  centum  for 
every  thirty  (30)  days,  shall  be  construed  not  to  exceed  ten 
per  centum  per  annum.  Provided  further,  that  the  payment  of 
interest  in  advance  for  one  year  at  a  rate  not  to  exceed  ten  per 
centum  per  annum,  shall  not  be  construed  to  constitute  usury. 
Provided  further,  that  nothing  herein  shall  be  so  construed  to 


3G2  TIIK    LAAV    OF    IXTEREST. 

prevent  the  pmchase  of  negotiable  mercantile  paper,  usurious 
or  otherwise,  for  a  valuable  consideration,  by  an  innocent  pur- 
chaser, free  from  all  equities  at  any  price  before  the  maturity 
of  the  same,  when  there  has  been  no  intent  to  evade  the  pro- 
visions of  this  act,  or  where  said  purchase  has  not  been  a  part 
of  the  original  usurious  transaction.  In  any  case,  however, 
when  the  original  holder  of  an  usurious  uote  sells  the  same  to 
an  innocent  purchaser,  the  maker  of  said  note  or  his  represen- 
tatives siinll  have  the  right  to  recover  back  from  the  said 
ori<nnal  holder  the  amount  of  principal  and  interest  paid  by 
hini  on  said  note."— (7.  S.,  §  2091. 

"  Wlienever  it  satisfaclorily  ai)pears  to  a  court  that  any 
bond,  bill,  uote,  assurance,  pledge,  conveyance,  contract,  secu- 
rity or  evidence  of  debt,  has  been  taken  or  received  in  viola- 
tion of  the  provisions  of  this  act,  the  court  shall  declare  tiie 
some  to  be  void,  and  enjoin  any  proceeding  thereon,  and  sliall 
order  the  same  to  be  cancelled  and  given  up." —  G.  S.,  i  i'0y2. 

"Every  person,  company  or  corporation  offending  against 
the  provisions  of  this  act,  shall  be  compelled  to  answer  on  oath 
any  complaint  that  may  be  exhibited  or  filed  against  him  in  the 
district  court  for  the  proper  county,  for  the  discovery  of  any 
sum  of  money,  goods,  or  things  in  action  so  taken,  accepted  or 
received  in  violation  of  anv  of  the  foregoing  provisions." — 
G.  S.,  §  2093. 

"Whenever,  in  any  action  in  any  court  the  defendant  sliall 
plead  or  answer  the  defense  of  usury,  either  party  to  the  action 
may  be  a  witness  in  his  own  behalf  on  the  trial,  except  in 
actions  in  which  the  opposite  party  sues  or  defends  as  adminis- 
trator or  personal  rei)resentative  of  a  deceased  person  ;  except, 
also,  actions  in  which  the  opposite  party  claims  as  assignee,  and 
the  original  assignor  is  deceased.  In  case  of  all  notes  or  other 
instruments  bearing  interest,  when  no  rate  of  interest  is  speci- 
fied after  maturity,  the  said  note  or  other  instrument  shall  be 
construed  to  bear  the  same  rate  of  interest  after  maturity  as 
l)i'r()re,  and  until  fully  paid  and  satisfied." —  G.  S.,  §  2094. 

The  laws  ogainst  usury  do  not  apply  to  mutual  building 
associations. — G.  S.,  §  2095. 

"Notliin*''  in  this  act  shall  be  construed  as  in  any  way  af- 
fecting any  contract  heretofore,  or  hereafter  made,  wherel)y  one 
(1 )  of\he  parties  thereto  has  advanced,  or  may  advance,  money 
to  be  used  in  money,  or  other  ventures,  mutually  determined 
upon,  and  whereby  tlie  other  party  thereto,  the  one  receiving 
such  money,  has  refunded,  or  agrees  to  refund  the  same,  with  in- 
terest thereon  as  stipulated  (provided  such  interest  does  not  ex- 
ceed a,  lawful  rate)  uud  in  addition  thereto  has  shared,  or  agrees 


INTEEEST    STATUTE'S.  363 

to  share  equally  or  otherwise,  with  the  part}-  so  advancing  the 
money,  the  profits,  if  an}'  there  were  or  may  be,  of  the  busi- 
ness or  other  ventures  carried  on,  or  undertaken,  in  whole  or 
in  part  with  such  money." — G.  S..,  §  2096. 

Banlvs  may  receive  interest  in  advance. — G.  S,,  §  2329. 

Savings  banks  are  not  required  to  pay  their  depositors  more 
than  four  per  cent  interest  per  annum. — G.  S.,  §  2384. 

"All  awards  for  compensation  and  damages  for  the  taking  of 
land  for  public  use  on  behalf  of  railroad  corporations,  where 
no  appeal  is  taken,  shall  draw  interest  at  the  rate  of  seven  per 
cent,  per  annum  from  the  date  of  the  filing  of  such  awards 
until  paid  ;  and  where  an  appeal  is  taken,  tlie  verdict  in  such 
appeal  shall  draw  tlie  like  rate  of  interest  until  paid." — G.  S., 
§  2482. 

"After  the  order  allowing  any  claim  is  made  [by  the  probate 
court]  ,  .  ,  the  claim  as  allowed  shall  draw  the  same  rate 
of  interest  as  judgments  recovered  in  the  district  courts." — 
G.  S.,  §  5722. 

MISSISSIPPI. 

The  county  board  of  supervisors  may  hire  money  for  pub- 
lic buildings,  etc.,  for  a  rate  of  interest  not  exceeding  seven  per 
cent."— ^?i.  Code,  §  311. 

"The  legal  rate  of  interest  on  all  notes,  accounts,  and  con- 
tracts shall  be  six  per  centum  per  annum  ;  but  contracts  may 
be  made,  in  writing,  for  the  payment  of  a  rate  of  interest  as 
great  as  ten  per  centum  per  annum.  And  if  a  greater  rate  of 
interest  than  ten  per  centum  shall  be  stipulated  for  or  received 
in  any  case,  all  interest  shall  be  forfeited,  and  may  be  recov- 
ered back,  whether  the  contract  be  executed  or  executory;  but 
this  section  shall  not  apply  to  a  building  and  loan  association 
domiciled  in  this  state,  dealing  only  with  its  members." — An. 
Code,  §  2348. 

Usurious  contracts  of  banks  or  their  oflScers,  etc.,  having  an 
interest  therein,  "shall,  as  to  the  whole  of  the  discount  or  in- 
terest allowed  or  paid,  or  agreed  to  be  allowed  or  paid,  be  void, 
and  the  discount  or  interest  may  be  recovered  back  by  the  per- 
son  suffering  such  discount  or  paying  such  interest." — An.  Code, 
§  2349. 

"All  judgments  and  decrees  founded  on  any  contract,  shall 
bear  interest  after  the  rate  of  the  debt  on  which  the  judgment 
or  decree  was  rendered.  All  other  judgments  and  decrees  shall 
bear  interest  at  the  rate  of  six  per  centum  per  annum." — An. 
Code,  §  2350. 

"When  partial  payments  are  made,  the   interest   that   has 


3G4  TIIK    LAW    OF    INTEREST. 

accrued  to  the  time  of  i)ayinent,  if  any,  shall  bo  fu'st  paid, 
uiid  the  ro.-ri(hie  of  such  partiid  [jayment  shall  be  placed  to  the 
payment  of  Uie  principal." — An.  Code,  §  2351. 


MISSOURI. 

The  court  may  adjust  claims  against  estates  of  deceased  per- 
sons not  yet  due,  by  rebating  therefrom  the  interest  thereon 
from  the  time  of  trial  until  their  maturity. — R.  /S.,  §  203. 

Executors  and  administrators  are  obliged  to  state  amount  and 
rate  of  interest  received  in  their  annual  accounts. — li.  ^'., 
§  215. 

'•All  interest  received  by  executors  or  administrators  on 
debts  due  to  the  deceased  siudl  l)e  assets  in  their  hands;  and 
if  they  lend  the  money  of  the  deceased,  or  use  it  for  their  own 
l)rivate  pui-poses,  they  shall  pay  interest  thereon  to  the  estate." 
—R.  S.,  §  224. 

'^Tiie  court  shall,  at  each  settlement,  exercise  an  equitable 
control  in  making  executors  and  administrators  account  for  in- 
terest received  by  them  on  debts  due  the  estate,  and  for  inter- 
est accruing  on  money  belonging  to  the  estate,  loaned  or  oth- 
erwise employed  by  them  ;  and,  for  that  purpose,  may  take 
testimony  or  examine  the  executor  or  administrator  on  oath." 
—R.  S.,  §  225. 

"Tiie  juiy  on  the  trial  of  any  issue,  or  on  any  inquisition  of 
damages,  may,  if  they  shall  think  fit,  give  damages,  in  the  na- 
ture of  interest,  over  and  above  the  value  of  the  goods  at  the 
time  of  the  conversion  or  seizure." — 7^.  S.,  §  4430. 

"Creditors  shall  be  allowed  to  receive  interest  at  the  rate  of 
six  per  cent  per  annum,  when  no  other  rate  is  agreed  upon,  for 
all  moneys  alter  they  become  due  and  payable,  on  written  con- 
tracts, and  on  accounts  after  they  became  due  and  demand  of 
payment  is  made  ;  for  money  recovered  for  the  use  of  another, 
and  retained  without  the  owner's  knowledge  of  the  receipt,  and 
for  all  other  money  due  or  to  become  due  for  the  forbearance 
of  payment  whereof  an  express  promise  to  pay  interest  has  been 
made."— 72.  *S'.,  §  5972. 

''The  parties  may  agree,  in  writing,  for  the  payment  of  in- 
terest, not  exceeding  eight  per  cent,  per  annum,  on  money  due 
or  to  become  due  upon  any  contract." — R.  S.,  §5973,  amended 
hy  act  of  1891. 

"Interest  shall  be  allowed  on  all  money  due  upon  any  judg- 
ment or  order  of  any  court,  from  the  day  of  rendering  the  same 
tintil  satisfaction  be  made  by  payment,  accord  or  sale  of  prop- 
erty ;  all  such  judgments  and  orders  for  money  upon  contracts 


INTEREST   STATUTES.  365 

bearing  more  than  six  per  cent,  interest  sliall  near  the  same 
interest  borne  by  such  contracts,  and  all  other  judgments  and 
orders  for  money  shall  bear  six  per  centum  per  annum  until  sat- 
isfaction made,  as  aforesaid." — li.  S.,  §  5974. 

"No  person  shall  directly  or  indirectly  take,  for  the  use  or 
loan  of  money  or  other  commodity,  above  the  rates  of  interest 
specified  in  the  three  preceding  sections,  for  the  forbearance  or 
use  of  one  hundred  dollars,  or  the  value  thereof,  for  one  year, 
and  so  after  those  rates  for  a  greater  or  less  sum,  or  for  a  longer 
or  shorter  time,  or  according  to  those  rates  or  proportions,  for 
the  loan  of  any  money  or  other  commodity." — /?.  S.,  §  5975. 

"Parties  may  contract,  in  writing,  for  the  payment  of  inter- 
est upon  interest ;  but  the  interest  shall  not  be  compounded 
oftener  than  once  in  a  year.  When  a  different  rate  is  not  ex- 
pressed, interest  upon  interest  shall  be  at  the  same  rate  as  in- 
terest on  the  princi[)al  debt." — E.  S.,  §  5977! 

"Where  tender  and  no  deposit  shall  be  made,  .  .  ,  the 
tender  shall  only  have  the  effect,  in  law,  to  prevent  the  running 
of  interest  or  the  accumulation  of  damages  from  and  after  the 
time  such  tender  was  made." — B.  S.,  §  6211. 

One  hundred  per  cent  per  annum  interest  is  allowed  on  an 
execution  against  a  defaulting  constable. — R.  S.,  §  6320. 

"After  the  return  of  an  execution,  satisfied  in  whole  or  in 
part  out  of  the  property  of  the  surety,  such  surety  shall  be 
entitled  to  a  judgment,  upon  motion,  against  the  principal,  for 
the  amount  paid  by  him,  together  with  the  interest  thereon  at 
ten  per  cent  per  annum,  from  the  time  of  the  payment." — li.  S., 
§  6351. 

"Usury  may  be  pleaded  as  a  defense  in  civil  actions  in  the 
courts  of  this  state,  and  upon  proof  that  usurious  interes  has 
been  paid,  the  same,  in  excess  of  the  legal  rate  of  interest,  shall 
be  deemed  payment,  shall  be  credited  upon  the  principal  debt, 
and  all  costs  of  the  action  shall  be  taxed  against  the  party 
guilty  of  exacting  usurious  interest,  who  shall  in  no  case  re- 
cover judgment  for  more  than  the  amount  found  due  upon  the 
principal  debt,  with  legal  interest,  after  deducting  therefrom 
all  payments  of  usurious  interest  made  by  the  debtor,  whether 
paid  as  commission  or  brokerage,  or  as  payment  upon  the 
principal,  or  on  interest  on  said  indebtedness." —  Usury  act  of 
1891, §  1. 

"In  actions  for  the  enforcement  of  liens  upon  personal 
property  pledged  or  mortgaged  to  secure  indebtedness,  or  to 
maintain  or  secure  possession  of  property  so  pledoed  or  mort- 
gaged, or  in  any  other  case  where  the  validity  of  such  lien  is 
drawn  in  question,  proof  upon  the  trial  that  the  party  holding 


306  THE    LAW    OF    INTEREST. 

or  claiming  to  hold  an}'  siieh  lien  has  received  or  exacted  usu- 
rious interest  for  such  indebtedness  shall  render  any  mortgage 
or  j)lodge  of  personal  property,  or  any  lien  whatsoever  thereon 
given  to  secure  such  indebtedness,  invalid  and  illegal." — Usury 
act  0/1891,  §  2. 

MONTANA. 

""Whenever  any  payment  of  principal  orinterost  has  been  or 
shall  be  made  upon  an  existing  contract,  whether  it  be  bill  of 
exchange,  promissory  note,  bond,  or  other  evidence  of  indebt- 
edness, if  such  {)ayment  shall  be  made  after  the  same  shnll  have 
become  due,  the  limitation  [of  time  in  which  an  action  shall  be 
brought]  shall  commence  from  the  time  the  last  payment  was 
made."—  C.  S.,  §  54. 

"Legacies  bearinterest  from  the  time  when  they  are  due  and 
payable,  except  that  legacies  for  maintenance,  or  to  the  testator's 
widow,  bear  interest  from  the  testator's  decease." — C.  S. ,  §  521. 

"All  itate  warrants  issued  by  the  pro[)er  authorities  of  this 
state,  after  the  first  day  of  March,  A.  D.  1881,  shall  draw  inter- 
est at  the  rate  of  six  per  centum  per  annum  from  and  after  the 
date  of  tlieir  presentation  until  there  are  funds  to  pay  said  war- 
rants in  the  hands  of  the  state  treasurer." — C.  S.,  §  1129,  as 
amended  b>/  the  state  constitution. 

"The  legal  rate  of  interest  on  the  forbearance  or  loan  of  au}^ 
mone}',  when  there  is  no  agreement  between  the  parties,  as  spec- 
ified in  section  1238  of  this  chapter,  shall  be  ten  per  centum  per 
annum." —  C.  S.^  ch.  73,  §  1236. 

"Creditors  shall  be  allowed  to  collect  and  receive  interest  when 
there  is  no  agreement  as  to  the  rate  thereof,  at  the  rate  of  ten 
per  cent,  per  annum  for  all  moneys  after  they  become  due,  on 
any  bond,  l)ill,  promissory  note,  or  other  instrument  of  writing, 
and  on  any  judgment  rendered  before  any  court  or  magistrate 
authorized  to  enter  up  the  same,  within  tlie  territory,  from  the 
day  of  entering  up  such  judgment  until  satisfaction  of  the  same 
be  made  ;  likewise  on  money  lent,  or  money  due  on  the  settle- 
ment of  accounts,  from  the  day  of  such  settlement  of  accounts, 
between  the  parties,  and  ascertaining  the  balance  due  ;  on  money 
received  to  the  use  of  another,  and  retained  without  the  owner's 
knowledge,  and  on  monev  withheld  by  an  unreasonable  antl  vex- 
atious delay."—  C.  S.,  ch.  73,  §  1237. 

"The  parties  to  au}^  ])ond,  bill,  promissory  note  or  other 
instrument  of  writing,  may  stipulate  therein  the  payment  of  a 
greater  or  higher  rate  of  interest  than  ten  per  centum  per  an- 
num, and  any  such  stipulation  contained  in  any  such  instrument 
of  writing  may  be  enforced   iu    any  court  of  law  or  equity  of 


INTEREST    STATUTES.  30 7 

competent  jurisdiction  in  this  territory.  And  when  any  instru- 
ment provides  for  a  certain  rate  of  interest,  from  date  until  paid, 
or  after  due  until  paid,  or  in  words  to  like  effect,  it  shall  be  con- 
strued to  mean  interest  at  the  stipulated  rae  until  the  same  is 
paid."— 7?.  S.,  ch.  73,  §  1238. 


NEBRASKA. 

"Any  rate  of  interest  which  may  be  agreed  upon,  not  exceed- 
ing ten  dollars  per  3'ear  upon  one  hundred  dollars,  shall  be  valid 
upon  any  loan  or  forbearance  of  money,  goods,  or  things  in  ac- 
tion ;  which  rate  of  interest  so  agreed  upon  may  be  taken  yearly 
or  for  any  shorter  period,  or  in  advance,  if  so  expressi}'  agreed." 
—  C.  S.,  §  2021. 

"Interest  upon  the  loan  or  forbearance  of  money,  goods,  or 
things  in  action  shall  be  at  the  rate  of  seven  dollars  per  year 
upon  one  hundred  dollars,  unless  a  greater  rate,  not  exceeding 
ten  per  cent  per  annum,  be  contracted  for  by  the  parties." — C. 
S.,  §  2022. 

"Interest  on  all  decrees  and  judgments  for  the  payment  of 
money  shall  be  from  the  date  of  the  rendition  thereof,  at  the 
rate  of  seven  dollars  upon  each  one  hundred  dollars  annually 
until  the  same  shall  l)e  paid  ;  Provided^  TLat  if  said  judgment  or 
decree  shall  1)e  founded  upon  any  contract,  either  verbal  or  writ- 
ten, ])y  the  terms  of  which  a  greater  rate  of  interest,  not  ex- 
ceeding the  amount  allowed  by  law,  than  seven  per  centum  shall 
have  been  agreed  upon,  the  rate  of  interest  upon  such  judgment 
or  decree  shall  be  tiie  same  aj  provided  for  by  the  terms  of  the 
contract  ui)on  which  the  same  was  founded." —  C.  >S'.,  §  2023. 

"On  money  due  on  any  instrument  in  writing,  or  on  seitle- 
ment  of  the  account  from  tlie  da^^  the  balance  shall  be  agreed 
upon,  on  money  received  to  the  use  of  another,  and  retained 
without  the  owner's  consent,  express  or  imi)lied,  from  the  re- 
ceipt thereof,  and  on  money  loaned  or  due,  juid  withheld  by  un- 
reasonable delay  of  payment,  interest  shall  be  allowed  at  the 
rate  of  seven  per  cent  per  annum.  Unsettled  accounts  between 
parties  shall  bear  interest  after  six  months  from  the  date  of  the 
last  item  thereof."—  C.  S.,  §  2024. 

"If  a  greater  rate  of  interest  than  is  liereinbeforc  allowed 
shall  be  contracted  for  or  received  or  reserved,  the  contract  shall 
not,  therefore,  be  void  ;  but  if  in  any  action  on  such  contract 
proof  be  made  that  illegal  interest  has  been  directly  or  indirectl}'- 
contracted  for,  or  taken,  or  reserved,  the  plaintiff  shall  only  re- 
cover the  principal,  without  interest,  and  the  defendant  shall 
recover  costs  ;  and  if  interest  shall  have  been  paid  thereon,  judg- 
ment shall  be  for  the  principal,  deducting  interest  paid  ;  Pro- 


308  THE    LAW    OF    INTEREST. 

r«/e(?,  The  acts  and  dealings  of  an  agent  in  loaning  money  sliall 
hind  the  principal,  and  in  all  cases  where  there  is  illegal  inter- 
est by  the  transaction  of  the  agent,  the  principal  will  be  held 
therel>y  as  if  he  had  done  the  same  in  i)erson.  Wliere  the  same 
person  acts  as  agent  for  the  borrower  who  obtains  the  money 
from  the  lender,  he  shallbe  deemed  lo  be  the  agent  of  the  loauer 
also."—  C.  ^.,  §  2025. 

''Any  person  charged  with  taking  illegal  interest  may  bo 
required  to  answer  touching  the  same,  on  oath,  in  any  civil 
proceeding."—  C.  S.,  §  202G. 

'4ielief  to  a  complain[an]t  in  case  of  an  usurious  loan,  may 
be  given  without  payment  or  tender  by  him  of  the  principal 
sum."— C.  ,S'.,§2027. 

"Any  officer  or  agent  of  a  person  or  a  corporation,  whether 
interesled  or  not,  may  be  summoned  as  witness  in  any  action 
for  usury  against  such  person  or  corporation,  and  re(iuired  to 
disclose  all  the  facts  of  the  case,  but  the  testimony  of  such  wit- 
ness, or  the  answer  of  a  party  as  required  in  section  G  [202G] 
shall  not  be  used  against  such  witness  or  party  in  any  criminal 
prosecution  for  perjury." — C.  S.,  §  2028. 

"Wlien  in  any  law,  or  in  any  instrument  in  writing  specifying 
a  rate  of  interest,  no  period  of  time  is  mentioned  for  which  such 
rate  is  to  be  calculated,  it  shall  be  deemed  to  be  by  the  year." 
—  C.  S.,  §  202D. 

"All  warrants  issued  by  the  proper  authorities  of  the  state, 
county,  city,  town,  or  other  numicipal  sulnlivision  less  than  a 
county,  shall  draw  interest  from  and  after  the  date  of  their  pre- 
sentation for  payment  at  the  rate  of  seven  percent.  i)er  annum, 
and  all  bonds  issued  by  any  county,  city,  township,  precinct, 
or  school  district,  shall  not  draw  interest  at  a  rate  exceeding 
eigiit  per  cent  per  annum." —  C.  S.,  §  2030. 

'•The  rate  of  interest  fixed  by  this  chapter  shall  not  affect 
interest  on  purchase  money  of  school,  university,  and  agricultu- 
ral college  lands,  or  on  lands  delinquent  or  sold  for  the  non-pay- 
ment of  taxes."—  C.  S.,  §  2031. 

Taxes  bear  ten  per  cent  interest. —  C  >S.,  §  4004. 

Any  treasurer  failing  to  pay  money  due  to  the  s'ate  shall  pay 
interest  thereon  "at  tlie  rate  of  ten  per  cent,  per  anmiin  from 
the  time  the  same  became  due  until  the  same  is  [)aid." —  C.  >S\, 
§  40G<;. 

>Iutn:d  loan  and  building  associations  are  exempt  from  the 
applications  of  the  usury  law. — Acts  of  18'J1,  ch.  14,  §  9. 

NEVADA. 

"  Where  there  is  no  express  contract  in  writing  fixing  a  dif- 
ferent rate  of  interest,  interest  shall  be  allowed  at  the  rate  of 


INTEREST   STATUTES.  369 

twentj'-foiir  per  cent,  per  annum  for  all  nione3'S  after  the  same 
become  due  on  any  bond,  bill,  promissory  note,  or  other  instru- 
ment in  writing,  executed,  drawn,  or  pa^^able  to  or  in  favor  of 
any  banking  association^  mentioned  in  section  one  of  this  Act, 
and  upon  any  overdrawn  bank  account  had  with  such  associa- 
tion, and  on  any  judgment  recovered  on  any  such  bond,  bill, 
promissory  note,  other  instrument  in  writing,  or  overdrawn 
bank  account  in  any  court  in  this  state." — G.  S.,  §947. 

"The  Clerk  shall  include  in  the  judgment  entered  up  by  him, 
any  interest  in  the  A~erdict  or  decision  of  the  court  or  referee, 
from  the  time  it  was  rendered  or  made." — G.  /S.,  §  3509. 

Certain  damages  are  allowed  in  lieu  of  interest  for  non-pay- 
ment of  bills  of  exchange.— G-'.  S.,  §§4892,  4893. 

"  When  there  is  no  express  contract,  in  writing,  fixing  a 
different  rate  of  interest,  interest  shall  be  allowed  at  the  rats 
of  seven  per  cent,  per  annum  for  all  moneys  after  they  become 
due  on  any  bond,  bill  or  promissory  note,  or  other  instrument 
of  writing,  on  any  judgment  recovered  before  any  court  in  this 
state  for  money  lent,  for  money  due  on  the  settlement  of  ac- 
counts from  the  day  on  which  the  balance  is  ascertained,  and 
from  money  received  to  the  use  of  another." — G.  S.,  §4903,  as 
amended  by  Acts  of  1887,  ch.  77. 

"Parties  may  agree,  in  writing,  for  the  payment  of  any  rate 
of  interest  whatever  on  money  due,  or  to  become  due,  on  any 
contract.  Any  judgment  rendered  on  such  contract,  shall  con- 
form thereto,  and  shall  bear  the  interest  agreed  upon  by  the 
parties,  and  which  shall  be  specified  in  the  judgment ;  provided, 
only  the  amount  of  the  original  claim  or  demand  shall  draw 
interest  after  judgment." — G.  /S'.,  §  4904. 

NEW  HAMPSHIRE. 

"  Interest  at  ten  per  cent  shall  be  charged  upon  all  taxes  not 
paid  on  or  before  the  first  day  of  December,  after  their  assess- 
ment, from  that  date,  which  shall  be  collected  with  the  taxes 
as  incident  thereto." — P.  S.,  ch.  59,  §  8. 

"  If  any  such  [savings  bank,  etc.]  corporation  shall  not 
pay  its  taxes  when  due,  it  shall  pay  interest  thereon  from  that 
time  at  the  rate  often  per  cent  per  annum." — P.  S.,  ch.  65,  §  13. 

"The  state  treasurer  shall  issue  his  extent  against  any  such 
corporation  which  fails  to  pay  its  taxes  when  due  for  the  sum 

*  Any  banking  association  formed  imcler  Act  of  Congress,  providing 
for  a  national  currency  and  its  circulation  and  redemption,  approved 
Eeb.  25,  1863. 
24 


370  THE    LAW    OF    INTEREST. 

uni)ai(l  ami  interest ;  and  all  property  owned  by  the  corpora- 
lion  on  tlie  first  day  of  April  preceding  shall  be  holden  lor  the 
l)aynient  thereof." — 1\  S.,  ch.  65,  §  14. 

Tiie  redeemer  of  proprietors'  land  sold  for  assessments  h\id 
thereon  under  the  statute  must  pay  '•  interest  at  the  late  of 
twelve  per  cent  per  annum  thereon  from  the  day  of  salo,  which 
shall  be  for  the  benefit  of  the  purchaser." — P.  S.,  ch.  154,  §  13. 

"  If  a  bank  chartered  by  this  state  shall  iieilect  or  refuse  to 
pay  in  specie,  upon  demand  therefor,  any  bill  or  note  issued  by 
it  as  currency,  the  holder  ma}-  recover  the  amount  thereof,  with 
interest  at  the  rate  of  two  per  cent  a  month  from  the  time  of 
demand,  in  an  action  of  assumpsit  against  the  bank,  and  treble 
costs  of  suit." — P.  /&'.,  cli.  1G3,  §  G. 

In  claims  against  insolvent  estates,  the  commissioner  ''  shall 
allow  interest,  on  demands  cairying  interest,  to  the  expiration 
of  the  commission,  and  on  demands  not  ordinarily  carrying 
interest,  to  the  same  time,  from  the  death  of  the  testator  or 
intestate;  l)ut  from  demands  not  {)ayable  and  not  on  interest 
he  shall  discount  such  sum  as  will  reduce  them  to  their  just 
present  value."— P.  S.,  ch.  192,  §  9. 

"  In  rendering  judgments,  and  in  all  business  transactions 
where  interest  is  paid  or  secured,  it  shall  be  computed  and  paid 
at  the  rate  of  six  dollars  on  a  hundred  dollars  for  one  year, 
unless  a  lower  rate  is  expressly  stipulated." — P.  S.,  ch.  203, 

"  If  any  person,  upon  a  contract,  receives  interest  at  a  higher 
rate  than  six  per  cent,  he  shall  forfeit  three  times  the  sum  so 
received  in  excess  of  six  per  cent  to  the  i)erson  aggrieveil  who 
will  sue  therefor."— P.  S.,  ch.  203,  §2. 

"  No  contract  shall  be  rendered  invalid  by  reason  of  the 
securing  therebj^  or  the  paying  or  receiving  thereon,  a  higher 
rate  of  interest  than  as  aforesaid  ;  but  the  money  secured 
thereby,  and  actually  advanced  or  loaned  thereon,  may  be  re- 
covered, with  interest  at  six  per  cent,  after  ai)plying  thereto  as 
payments  any  excess  of  interest  above  six  per  cent  received 
thereon,  as  of  the  dates  of  such  receipts.  The  right  to  such 
application  shall  exist  and  may  be  enforced  so  long  as  a  right 
of  action  upon  the  contract  may  be  maintained."— P.  S.,  ch. 
203,  §3. 

'•  If  a  person  has  recovered  the  excess  above  six  per  cent  so 
paid  by  liim,  he  shall  not  tlicreaCter  be  entitled  to  have  it  a[)- 
plied  as  provided  in  the  preceding  section." — /'.  S,,  ch.  203, 
§4. 

"  Nothing  in  this  chapter  shall  extend  to  the  letting  of  cat- 
tle, or  other  usages  of  like  nature  in  practice  among  farmers, 


INTEREST    STATUTES.  371 

or  to  maritime  contracts,  as  bottomry,  insurance,  or  course  of 
exchange,  as  heretofore  used." — P.  S.,  ch.  203,  §  5. 

''  Judgments  for  debt,  damages,  or  costs  shall  be  rendered  in 
dollars  and  cents  ;  and  in  rendering  judgment  for  the  debt  or 
damages  found  by  verdict,  report  of  an  auditor,  or  otherwise, 
interest  shall  be  added  from  the  time  of  such  finding  to  the 
rendition  of  judgment."— P.  S.,  ch.  228,  §  1. 

"Interest  is  payable  on  executions  in  civil  actions  from  the 
time  of  judgment  rendered." — P.  >S.,  ch.  231,  §  9. 


NEW  JERSEY. 

Claims  against  estates  of  deceased  persons  and  insolvent 
debtors  not  yet  due  may  be  proved,  "deducting  only  a  rebate 
of  legal  interest  for  what  he  shall  receive  on  such  debt,  to  be 
computed  from  the  actual  payment  thereof  to  the  time  such  debt 
would  have  become  due." — R.  S.,}^.  51,  §54, p.  504,  §  27,  and 
p.  764,  §  61. 

"No  person  or  corporation  shall,  upon  contract,  take  directly 
or  indirectly,  for  loan  of  any  money,  wares,  merchandise,  goods 
and  chattels,  above  the  value  of  six  dollars  for  the  forbearance 
of  one  hundred  dollars  for  a  year,  and  after  that  I'atc  for  a  greater 
or  less  sum  or  for  a  longer  or  shorter  time." — 11.  S.,  p.  5]  9,  §  1, 
as  amended  by  P.  L.,  1878,  p.  30. 

"  In  all  cases  of  suits  at  law  or  in  equity  to  enfoi'ce  any  note, 
bill,  bond,  mortgage,  contract,  covenant,  conveyance,  or  assur- 
ance, which  shall  be  hereafter  made  for  the  payment  or  deliv- 
ery of  any  money,  wares,  merchandise,  goods,  or  chattels  lent, 
and  on  which  ahigher  rate  of  interest  shall  be  reserved  or  taken 
than  was  or  is  allowed  or  taken  by  the  law  of  the  place 
where  the  contract  was  made  or  is  to  be  performed,  the  amount 
or  value  actually  lent,  without  interest  or  costs  of  suit,  may  be 
recovered,  and  no  more ;  and  if  any  premium  or  illegal  interest 
shall  have  been  paid  to  the  lender,  the  sum  or  sums  so  paid 
shall  be  deducted  from  the  amount  that  may  be  due  as  aforesaid, 
and  recovery  had  for  the  balance  onl}'." — E.  S.,2^-  519,  §  2. 

"Every  person  offending  against  the  first  section  of  this  act, 
may  be  compelled  to  answer  as  a  witness  in  any  suit  that  he  may 
bring,  either  at  law  or  in  equity,  as  to  his  agreement  to  receive, 
or  the  receipt  by  him,  of  any  money,  wares,  merchandise,  goods 
or  chattels,  in  violation  of  the  provisions  of  said  first  section." 
B.S.,p.  519,  §  3. 

"Any  borrower  of  money,  wares,  merchandise,  goods  or  chat- 
tels, may  exhibit  a  bill  in  chancery  against  the  lender,  and  com- 
pel him  or  her  to  discover,  upon  oath  or  aflSrmation,  the  money 


372  THE    LAW    OF   INTEREST. 

or  wares,  merchandise,  goods  or  chattels,  really  lent,  and  all 
agreements,  devices,  shifts,  bargains,  contnicts  and  conveyan- 
ces wliich  sliall  liave  passed  between  them  relative  to  such  loan, 
or  the  lepaynient  thereof,  and  the  interest  or  consideration  for 
tlic  same,  and  if  thereupon  it  shall  ap[)(jar  that  more  than  law- 
ful interest  was  talcen  or  reserved,  tlie  lender  shall  be  obliged 
to  accei  t  his  princi[)al  money,  or  the  wares,  merchandise,  goods 
or  chattels,  or  the  value  thereof,  without  any  interest  or  other 
consideration,  and  to  pay  costs." — E.  /S.,  ]).  519,  §  4. 

''Every  solicitor,  scrivener,  broker,  or  driver  of  bargains, 
who  shall  directly  or  indirectly,  take  or  receive  more  than  the 
rate  or  value  of  fifty  cents  for  brocage,  or  soliciting  or  procur- 
ing the  loan  or  forbearance  of  one  luindred  dollars  for  a  year, 
and  so  in  proportion  for  a  greater  or  less  sum,  making  or  re- 
newing thel)ond  or  bill  for  such  loan  or  forbearance,  or  for  any 
counter  bond  or  bill  concerning  the  same,  shall,  for  every  such  of- 
fence, forfeit  sixteen  dollars,  to  be  recovered  by  action  of  debt, 
with  costs,  by  any  person  who  shall  sue  for  the  same  ;  the  one 
moiety  to  the  prosecutor,  and  the  other  to  the  state." — K.  S.,  /). 

519,  §5. 

"No  bond,  mortgage  or  other  security  for  the  payment  of 
money  heretofore  made  or  issued,  or  that  may  hereafter  l)e 
made  or  issued  by  any  railroad  or  canal  corporation  created  by 
or  under  the  laws  of  this  state,  shall  be  heUl,  deemed  or  con- 
sidered invalid,  because  such  bond,  mortgage  or  other  secur- 
ity may  have  been  made,  issued,  sold,  assigned  or  otherwise 
disposed  of  by  such  corporation  below  the  par  value  tliereof ; 
provided,  such  bond,  mortgage  or  other  securit}'  shall  be  valid 
on  its  face."— i2.  S.,  p. 519,  §  6. 

All  contracts  for  the  loan  of  any  money,  wares,  merchandise, 
goods  or  chattels,  hereafter  ma-te  in  the  county  of  Monmouth 
in  this  state,  whereby  above  the  value  of  seven  dollars  for  the 
forbearance  of  one  hundred  dollars  for  a  year  or  above  that  rate 
for  a  greater  or  less  sum,  or  for  a  longer  or  shorter  period,  shall 
he  taken  directly  or  indirectly,  shall  l)e  utterly  void." — R.  S.,p. 

520,  §7   (1). 

Interest  on  unpaid  taxes  is  allowed  at  a  rate  not  to  exceed 
twelve  per  cent  per  annum  from  the  fifteenth  of  October  after 
they  are  assessed  ;  and  if  land  is  sold  for  the  taxes  such  land 
may  lie  redeemed  by  paying  a  rate  of  interest  of  from  seven  to 
twelve  per  cent  per  annum  as  determined  by  the  board  of  al- 
dermen or  the  common  council. — E.  aS'.,  p.  711,  §  l,p.  712,  §  5, 
and  p.  1159,  §  85. 

"Where  executors,  administrators,  guardians  or  tiustees  use 
the  money  of  minors  or  others  which  shall  come  to  their  bauds, 


INTEREST    STATUTES.  373 

they  shall  be  accountable  not  only  for  the  principal,  but  for  the 
interest  thereon."— 72.  S.,  2^.  777,  §  115. 

'•Not  more  than  the  rate  of  twenty  five  per  centum  per  annum 
interest  shall  be  charged  on  any  sum  not  exceeding  twenty-five 
dollars  loaned  upon  any  pledged  or  pawned  goods  and  on  sums 
exceeding  twenty-five  dollars  not  more  than  ten  per  centum  in- 
terest shall  be  charged,  and  such  interest  at  sucli  rate  shall  be 
in  lieu  of  all  other  charges  and  demands." — B.  S.,  p.  812,  §  3. 

Not  more  than  five  percent  interest  is  to  be  paid  to  depositors 
in  savings  banks. — Acts  of  1878,  ];>.  393. 

Mutual  savings  associations  cannot  take  for  any  loan  more 
than  seven  per  cent  interest. — R.  -&'.,  p.  1069,  §  G2. 

Mutual  building  and  loan  associations  do  not  come  under  the 
usury  statute. — P.  L.,  1876,  p.  243. 

NEW  MEXICO. 

Guardians  must  loan  mouev,  if  they  can,  or  else  pay  interest. 
(7. /..,§§  1019,  1034. 

"The  rate  of  interest,  in  the  absence  of  a  written  contract 
fixing  a  different  rate,  shall  be  six  per  cent,  per  annum,  in  the 
following  cases : 

'■^First — ^On  money  due  bj'  contract. 

"*S'eco7i(^— On  judgments  and  decrees  for  the  payment  of 
money  when  no  other  rate  is  expressed. 

'■'■Third  —  On  money  received  to  the  use  of  another,  and  re- 
tained without  the  owner's  consent  expressed  or  implied. 

•■•Fourth  —  On  money  due  npon  the  settlement  of  matured 
accounts  from  the  day  the  balance  is  ascertained. 

^^ Fifth — On  money  due  upon  open  account,  after  six  months 
from  the  date  of  the  last  item." — C  L.,  §  1734. 

"Judgments  and  decrees  for  the  payment  of  money  shall  draw 
the  same  rate  of  interest  with  the  contract  on  which  they  are 
rendered;  and  such  rate,  if  other  than  six  per  cent.,  shall  be  ex- 
pressed in  the  judgment  or  decree,  but  no  judgment  or  decree 
shall  draw  more  than  twelve  per  cent,  interest." — C.  L.^  §  1735. 

"In  current  or  open  accounts  in  commercial  houses  there  shall 
not  be  collected  more  than  six  per  cent,  interest  thereon,  six 
months  after  the  delivery  of  the  last  article :  Provided,  that  in 
written  contracts  for  the  payment  of  mone^',  it  shall  not  be  le- 
gal to  recover  more  than  twelve  per  cent,  interest  per  annum." 
—C.L.,  §  1736. 

"Any  person,  persons,  or  corporation,  who  shall  hereafter 
charge,  collect,  or  receive  from  an}'  person  a  higher  rate  of  in- 
terest than  twelve  per  cent,  per  annum,  shall  be  guilty  of  a 


374  THE    LAW   OF   INTEREST. 

misdemeanor,  and  upon  conviction  tliereof  before  the  district 
court  or  a  justice  of  the  peace,  sliall  i)e  fined  in  a  sum  of  not  less 
than  twenlv-Qve  dollars  nor  more  than  one  hundred  dollars; 
and  such  person,  persons,  or  corporation,  shall  forfeit  to  the 
person  of  whom  such  interest  was  collected  or  received,  or  to 
his  executors,  administrators,  or  assigns,  double  the  amount  so 
collected  or  received  upon  any  action  brought  for  the  recovery 
of  the  same  within  three  years  after  such  cause  of  action  ac- 
crued."—  C.  L.-,  §  1737. 

'•The  provisions  of  this  act  shall  also  apply  to  any  person, 
persons,  corporation,  or  officer  of  the  same,  who  may  charge, 
receive,  or  collect  a  higher  rate  of  interest  than  twelve  per  cent, 
per  annum  by  means  of  discount,  commission,  agency,  or  any 
ether  sul)lerfuge." — C.  X.,  §  17o8. 

"All  persons  who  shall  purchase  grain,  of  any  kind  whatso- 
ever, from  one  or  more  laborers,  in  case  of  any  general  injury 
or  particular  accident,  such  as  inundation,  devouring  insects, 
scarcity  of  water,  damage,  or  any  other  unavoidable  accident, 
in  such  cases  the  purchaser  or  purchasers  of  grain  shall  not 
have  the  right  to  exact  of  their  debtors  their  pay  in  grain,  but 
only  exact  the  amount  they  may  have  paid  for  the  same,  add- 
ing'thereto  twelve  per  cent.,  annually,  on  said  amount." — C.  X., 
§  1739. 

Pawnbrokers  are  not  to  collect  more  than  ten  per  cent  a  month 
interest  under  penaltv  of  indictment  for  obtaining  money  under 
false  pretences.— a  Z.,  §§  1818,  1819. 

NEW  YORK. 

"The  legislature  shall  not  pass  a  private  or  local  bill  .  . 
regulating  the  rate  of  interest  on  money." — N.  Y.  Const.y  art. 
3,1  18. 

"All  taxes  or  assessments  which  shall  remain  unpaid  for 
thirty  days  after  the  final  return  of  said  warrant  [for  collection] 
shall  bear  interest  at  the  rate  of  twelve  per  centum  per  annum, 
from  and  after  the  date  of  said  return." —  R.  S.,  p.  899,  §  5. 

"If  any  tax  charged  on  lands  of  non-residents,  or  lands  re- 
turned [unpaid]  shall  remain  until  the  first  day  of  August  fol- 
lowing the  year  in  which  they  shall  have  been  assessed,  they 
shall  thereafter  be  subject  to  a  yearly  interest,  at  the  rate  of 
ten  per  cent.,  until  the  same  shall  be  duly  paid  on  the  lands 
sold."— i?.  S.,  p.  1023,  §  26. 

"No  corporation  shall  hereafter  interpose  the  defence  of 
usury  in  any  action." — li.  S.,  p.  1537,  c/i.  172,  §  1. 

"The  rate  of  interest  upon  the  loan  or  forbearance  of  any 
pjoney,  goods,  or  things  in  action  shall  be  six  dollars  upon  one 


INTEREST    STATUTES.  375 

liundred  dollars,  for  one  year,  and  after  that  rate,  for  a  greater 
or  less  sum,  or  for  a  longer  or  shorter  time.  But  nothing 
herein  contained  shall  be  so  construed  as  to  in  any  way  affect 
any  contract  or  obligation  made  before  the  passage  of  this 
act."— J?.  S.,  p.  2253,  §  1. 

"  No  person  or  corporation  shall,  directly  or  indirectl}',  take 
or  receive  in  money,  goods  or  things  in  action,  or  in  any  other 
way,  any  greater  sum  or  greater  value,  for  the  loan  or  for- 
bearance of  any  money,  goods  or  things  in  action,  than  is 
above  prescribed."— i^.  S.,p.  2253,  §  2. 

"Every  person  who,  for  any  such  loan  or  forbearance,  sliall 
pa}'  or  deliver  any  greater  sum  or  value  than  is  above  allowed 
to  be  received,  and  his  personal  representatives,  may  recover 
ill  an  action  against  the  person  who  shall  have  taken  or  received 
tlie  same,  and  his  personal  representatives,  the  amount  of  the 
money  so  paid  or  value  delivered,  above  the  rate  aforesaid,  if 
such  action  be  brought  witliin  one  year  after  such  payment  or 
delivery."— i2.  S.,  p.  2253,  §  3. 

"If  such  suit  be  not  brought  within  the  said  one  year,  and 
prosecuted  with  effect,  then  the  said  sura  may  be  sued  for  and 
recovered  with  costs,  at  any  time  within  three  years  after  the 
said  one  year,  by  any  overseer  of  tlie  poor  of  the  town  where 
such  payment  may  have  been  made,  or  by  any  county  superin- 
tendent of  the  poor  of  the  county,  in  which  the  payment  may 
have  been  made."— i2.  S.,p.  2253,  §4. 

"All  bonds,  bills,  notes,  assurances,  conveyances,  all  other 
contracts  or  securities  whatsoever  (except  bottomry  and  respon- 
dentia bonds  and  contracts),  and  all  deposits  of  goods  or  other 
things  whatsoever,  whereupon  or  whereby  there  shall  be  re- 
served or  taken,  or  secured  or  agreed  to  be  reserved  or  taken, 
any  greater  sum,  or  greater  value,  for  the  loan  or  forbearance 
of  any  money,  goods  or  other  things  in  action,  than  is  above 
descril)ed,  shall  be  void  ;  but  this  act  shall  not  affect  such 
I)aper  as  has  been  made  and  transferred  previous  to  the  time  it 
shall  take  effect."— i2.  S.^p.  2254,  §  5. 

"  Every  person  offending  against  the  provisions  of  this  title, 
shall  be  compelled  to  answer  on  oalh  any  bill  that  may  be 
exhibited  against  him  in  the  court  of  chancery,  for  the  dis- 
covery of  any  sum  of  money,  goods  or  things  in  action  so 
taken,  accepted,  or  received,  in  violation  of  the  foregoing  pro- 
visions, or  either  of  them." — B.  S.,  p.  2254,  §  G. 

"Every  person  Avho  shall  discover  and  repay  or  return  the 
money,  goods,  or  other  things  so  taken,  accepted  or  received, 
or  ihe  value  thereof,  sliall  be  acquitted  and  discharged  from 
any  other  or  further  forfeiture,  penalty  or  punishment,  which 


376  THE    LAW    OF    INTEREST. 

he  mnv  have  incurrecl,  by  taking  or  receiving  the  money,  goods 
or  othi'r  tliin«'  so  discovered  and  repaid,  or  retnrned,  as  afore- 
said."—7?.  ^'^  p.  2254,  §  7. 

'•  Whenever  anv  borrower  of  any  money,  goods  or  tlnngs 
in  action,  shall  file  a  bill  in  chancery  for  a  discovery  of  the 
money,  goods  or  things  in  action,  taken  or  received,  in  violation 
of  eilhci-^of  the  foregoing  provisions,  it  shall  not  be  necessary 
for  hiin  to  pav,  or  offer  to  pay,  any  interest  whatever  on  the 
sum  or  thing' loaned  ;  nor  shall  any  court  of  equity  require  or 
compel  the  payment  or  deposit,  of  the  principal  sum,  or  any 
part  thereof,  as  a  condition  of  granting  lelief,  to  the  l)ono\y(T, 
in  any  case  of  a  usurious  loan  forbidden  by  this  chapter." — 
i?.  ,S.,2).  2254,§8. 

"For  the  purpose  of  calculating  interest,  a  month  shall  be 
considered  the  twelfth  part  of  a  year,  and  as  consisting  of 
tiiirty  days;  and  interest  for  any  number  of  days,  less  than  a 
month,  shall  be  estimated  by  the  proportion  which  such  number 
of  davs  shall  bear  to  thirty."— i2.  S.,2).  2254,  §  9. 

''Whenever,  in  any  statute,  act,  deed,  written  or  verbal 
contract,  or  in  any  public  or  private  instrument  whatever,  any 
certain  rate  of  interest  is  or  shall  be  mentioned,  and  no  period 
of  time  is  stated  for  which  such  rate  is  to  be  calculated,  in- 
terest shall  be  calculated  at  the  rate  mentioned,  by  the  year, 
in  the  same  manner  as  if  the  words  '  per  annum'  or  '  Uy  the 
year,'  had  been  added  to  such  rate."— i^  S.,  p.  2254,  §  10. 

"  Whenever  in  an  action  at  law  the  defendant  shall  plead  or 
give  notice  of  the  defence  of  usury,  and  shall  verify  the  tiulli 
of  his  plea  or  notice  by  affidavit,  he  may,  for  the  purpose  of 
proving  the  usury,  call  and  examine  the  plaintiff  as  a  witness, 
in  the  "same  manner  as  other  witnesses  may  be  called  and  ex- 
amined."—i?.  S.^p.  2255,  §  2. 

"Every  person  offending  against  the  provisions  of  tlie  said 
title,  or  of  this  act,  may  be  compelled  to  answer  on  oath  any 
bill  that  shall  be  exhibited  against  him,  in  the  court  of  chan- 
cerv,  for  relief,  or  discovery,  or  both."—  R.  aS'.,  p.  2255,  §  3. 

"Whenever  any  borrower  of  money,  goods  or  things  in  ac- 
tion, shall  file  a  bill  in  chancery  for  relief  or  discovery,  or  l)oth, 
against  any  violation  of  the  provisions  of  the  said  title  or  of  this 
act,  it  shall  not  be  necessary  for  him  to  pay  or  offer  to  pay 
any  interest  or  principal  on  the  sum  or  thing  loaned;  nor 
shall  any  court  of  chancery  require  or  compel  the  payment  or 
deposit  of  the  principal  sum  or  interest,  or  any  portion  thereof, 
as  a  condition  of  granting  relief  or  compelling  or  discovering 
to  the  borrower  in  any  case,  usurious  loans  forbidden  by  said 
title  or  bv  this  act."— -R.  &,,!).  2255,  §  4. 


INTEREST   STATUTES.  377 

""Whenever  it  shall  satisfactorily  appear  by  the  admissions  of 
the  defendant,  or  by  proof,  that  any  bond,  bill,  note,  assurance, 
pledge,  conveyance,  contract,  security,  or  any  evidence  of  del)t, 
has  been  taken  or  received  in  violation  of  the  provisions  of  said 
title  ovof  this  act,  the  court  of  chancery  shall  declare  the  same  to 
be  void,  and  enjoin  any  prosecution  thereon,  and  order  the  same 
to  be  surrendered  and  cancelled." — R.  /&'.,  j)-  2255,  §  5. 

"An  accumulation  of  the  interest  of  money,  the  produce  of 
stock  or  other  income  or  profits  arising  from  personal  property, 
maybe  directed  by  any  instrument  sufficient  in  law  to  pass  such 
personal  property  as  follows  : 

"  1.  If  the  accumulation  be  directed  to  commence  from  the 
date  of  the  Instrument,  or  from  the  death  of  the  person  execut- 
ing the  same,  such  accumulation  must  be  directed  to  be  made 
for  the  benefit  of  one  or  more  minors  then  in  being,  or  in  being  at 
such  death,  and  to  terminate  at  the  expiration  of  their  minor- 
ity : 

"  2.  If  the  accumulation  be  directed  to  commence  at  any 
period  subsequent  to  tiie  date  of  the  instrument,  or  subsequent 
to  the  death  of  the  person  executing  such  instrument,  it  must 
be  directed  to  commence  within  the  time  allowed  [two  lives  in 
being]  in  the  first  section  of  this  title,  for  the  suspension  of  the 
absolute  ownership  of  personal  property,  and  at  some  time  dur- 
ing the  mhiority  of  the  persons  for  whose  benefit  it  is  intended, 
and  nnist  terminate  at  the  expiration  of  their  minority." — R.  S., 
p.  2257,  §  3. 

All  other  accumulations  of  interest,  etc.,  than  as  above  stated 
are  void  for  the  excess. — R.  S.,p.  2257,  §  4. 

"All  interest  received  by  any  special  administrator,  on  all 
moneys  which  may  come  to  his  hands,  shall  be  accounted  for 
and  paid  over  by  liim  in  the  same  manner  as  the  principal  sum 
in  his  hands."— i?.  S.,p.  2305,  §  12. 

"If  it  appears,  ui)on  the  trial,  that  tlie  sum  so  tendered'  was 
sufficient  to  pay  the  plaintiff's  demand,  or  to  make  amends  for 
the  injury,  and  also  to  pay  the  costs  of  the  action,  to  the  time 
of  the  tender,  the  plaintiff  cannot  recover  costs  or  interest,  from 
the  time  of  the  tender,  but  must  pay  the  defendant's  costs  from 
that  t\me."—R.  S.,  Civ.  Proc,  §  733. 

"A  judgment  for  a  sum  of  money,  rendered  in  a  court  of 
record,  or  not  of  record,  or  a  judgment  rendered  in  a  court  of 
record,  directing  the  payment  of  money,  bears  interest  from 
the  time  when  it  is  entered.  But  where  a  judgment  directs 
that  money  paid  out  shall  be  refunded  or  repaid,  the  direction 
includes  interest  from  the  time  when  the  money  was  paid,  un- 
less the  contrary  is  expressed." — R.  S.,  Civ.  Proc,  §  1211. 

1  To  the  plaintiff  or  his  attorney  after  suit  is  brought. 


378  THE    LAAV    OF   INTEREST. 

"Wlipre  final  jiidi^ment  is  rendered  for  a  sum  of  money, 
awarded  by  a  verdict,  report  or  decision,  interest  upon  the  sum 
awarded,  from  tiie  time  wlien  tlie  verdict  was  rendered,  or  the 
report  or  decision  was  made,  to  tlie  time  of  entering  JMd*j;ment, 
must  be  computed  by  tlie  clerk,  added  to  the  sum  awarded,  and 
included  in  the  amount  of  the  judgment." — 7^.  S.,  Civ.  Proc, 
§  1235. 

In  actions  for  causing  death  b}- negligence,  "when  final  judg- 
ment for  the  plaintiff  is  rendered,  the  clerk  must  add  to  the 
sum  so  awarded,  interest  thereupon  from  the  decedent's  death, 
and  include  it  in  the  judgment.  The  inquisition,  verdict,  re- 
port, or  decision,  may  specify  the  day  from  which  interest  is 
to  be  computed  ;  if  it  omits  so  to  do,  the  day  may  be  deter- 
mined by  the  clerk,  upon  affidavits." — R.  S.,  Cio.  Prac.,%  1904- 

"A  cause  of  action  to  cancel,  or  otherwise  affect,  an  instru- 
ment executed,  or  an  act  done,  as  security  for  a  usurious  loan 
or  forbearance,  can  bo  thus  transferred, ^  when  the  instrument 
or  act  creates  a  specific  charge  upon  j)ro[)('rty,  which  is  also 
transferred  in  disaffirmance  thereof,  and  not  otherwise  ;  but, 
in  tliat  case,  tiie  transferee  does  not  succeed  to  tlie  rigiit,  con- 
ferred by  statute  upon  the  borrow-er,  to  procure  relief,  williont 
paving,  or  offering  to  pay,  any  part  of  the  sum  or  thing  loaned." 
—B.S.,  Cio.  Proc,  §  1911/ 


NORTH  CAROLIXA. 

"All  bonds,  bills,  notes,  bills  of  exchange,  liquidated  and 
settled  accounts,  shall  bear  interest  from  the  time  tliey  become 
due,  provided  such  liquidated  and  settled  accounts  be  signed 
by  the  debtor,  unU^ss  it  l)e  specially'  expressed  that  interest  is 
not  to  accrue  until  a  time  mentioned  in  the  said  writings  or 
securities." — Code,  §  44. 

"All  bills,  bonds,  or  notes  ]xayable  on  demand,  shall  be  held 
and  deemed  to  be  due  when  demandable  by  the  creditor,  and 
shall  bear  interest  from  the  time  they  are  demandable,  unless 
otherwise  expressed." — Code,  §  45. 

"All  securities  for  the  payment  or  delivery  of  specific  arti- 
cles shall  bear  interest  as  moneyed  contracts,  and  the  articles 
shall  be  rated  by  the  jnry  at  the  time  they  become  due." 
—Code,  §46. 

''Bills  of  exchange  which  shall  be  drawn  or  indorsed  in  the 
state,  and  shall  l>e  protested,  shall  carr\'  interest,  not  from  tlie 
datetliereof,  but  from  the  time  of  payment  therein  mentioneil." 
— Code,  §  47. 

'  So  as  to  sue  in  the  transferee's  own  name. 


INTEREST    STATUTES.  379 

"When  the  judgment  is  for  the  recovery  of  mone}-,  interest 
from  the  time  of  the  verdict  or  re[)ort  until  judgment  be  finally 
entered  shall  be  computed  by  the  clerk  and  added  to  the  costs 
of  the  party  entitled  thereto." — Code,  §529. 

"All  sums  of  money  due  bj' contract  of  any  kind  Avhatsoever, 
excepting  money  due  on  penal  bonds,  shall  bear  interest, 
and  when  a  jury  shall  render  a  verdict  therefor  they  shall  dis- 
tinguish the  principal  from  the  sum  allowed  as  interest;  and  the 
principal  sum  due  on  all  such  contracts  shall  bear  interest  from 
the  time  of  rendering  judgment  thereon  until  it  be  paid  and  sat- 
isfied. In  like  manner,  the  amount  of  any  judgment  or  decree, 
except  the  costs,  rendered  or  adjudged  in  any  kind  of  action, 
though  not  on  contract,  shall  bear  interest  till  [)aid,  and  the 
judgment  and  decree  of  the  court  shall  be  rendered  according 
to  this  section." — Code,  §  530. 

"Whenever  a  suit  shall  be  instituted  on  a  single  bond,  a 
covenant  for  the  payment  of  money,  bill  of  exchange,  promis- 
sory note,  or  a  signed  account,  and  tlie  defendant  shall  not 
plead  to  issue  thereon,  upon  judgment,  the  cleik  of  the  court 
shall  ascertain  the  interest  due  by  law,  without  a  writ  of  in- 
quiry, and  the  amount  shall  be  included  in  the  final  judgment 
of  th3  court  as  damages,  which  judgment  shall  be  rendered 
thei-einin  the  manner  prescribed  by  the  precedino-  section" — 
Code,  §531. 

"The  legal  rate  of  interest  shall  be  six  per  cent,  per  annum 
for  such  time  as  interest  may  accrue,  and  no  more  :  Provided^ 
that  upon  special  contract  in  writing,  signed  by  the  party  to 
be  charged  therewith,  or  by  his  agent,  so  great  a  rate  as  eight 
per  cent,  may  be  allowed." — Code^  §  3835. 

"The  taking,  receiving,  reserving,  or  charging  a  rate  of  in 
terest  greater  than  is  allowed  by  tiie  preceding  section,  when 
knowingly  done  shall  be  deemed  a  forfeiture  of  the  entire  interest 
which  the  note,  or  other  evidence  of  debt,  carries  with  it,  or 
which  has  been  agreed  to  be  paid  thereon  ;  and  in  case  a  greater 
rate  of  interest  has  been  paid,  the  person  by  whom  it  has  been 
paid,  or  his  legal  representative,  may  recover  back,  in  an  action 
in  the  nature  of  an  action  of  debt  twice  the  amount  of  interest 
paid  :  Provided,  such  action  shall  be  commenced  within  two 
years  from  the  time  the  usurious  transaction  occurred." — Code^ 
§  3836. 

NORTH  DAKOTA. 

The  statutes  given  under  South  Dakota  are  still  in  force  in 
North  Dakota,  except  so  far  as  they  have  been  repealed  and 
amended  by  the  following  statutes,  which  have  been  passed 
since  North  Dakota  became  a  state. 


380  THE    LAW    OF    INTEREST. 

"Interest  for  any  legal  indebtedness  shall  be  at  the  rate  ot  7 
per  centum  per  annum,  unless  a  different  rate  is  contracted 
for  in  writini;-,  and  all  contracts  shall  bear  tiie  same  rate  of  in- 
terest after  they  become  due  as  before ;  unless  it  clearly  ap- 
pears therefrom  that  such  was  not  the  iutenlion  of  the  parties  ; 
and  no  contract  for  a  greater  rate  of  interest  than  12  per  cen- 
tum pL'r  annum  shall  be  valid." — Acts  of  1890,  ch.  1<S1,  §  1. 

"2S'o  person,  company  or  corporation  shall  directly  or  in- 
directly take  or  receive,  or  agree  to  take  or  receive,  in  money, 
goods  or  things  in  action,  or  in  any  other  way,  any  greater  sum, 
or  any  greater  value  for  the  loan  or  forbearance  of  money, 
goods,  or  things  in  action  than  12  per  centum  per  annum  ;  and  in 
the  computation  of  interest  upon  any  bond,  note  or  other  instru- 
ment or  agreement,  interest  shall  not  be  compounded,  but  any 
contract  to  pay  interest  not  usurious  upon  interest  overdue  shall 
not  be  construed  to  be  usury." — Acts  of  18D0,  ch.  18-4,  §  2. 

"All  bonds,  bills  of  exchange,  promissory  notes,  mortgages, 
contracts  and  securities  whatsoever,  and  all  deposits  or  pledges 
of  goods,  wares,  merchandise,  or  property  of  any  kind,  or  things 
in  action  whereby  or  whereupon  there  shall  l)e  directly  or  in- 
directly taken,  reserved  or  secured,  or  agreed  to  be  taken, 
reserved  or  secured,  any  greater  sum  or  value  for  the  use,  loan 
or  forbearance  of  money  or  things  in  action  than  is  provided 
in  Section  1  of  this  act,  whether  the  sum  or  value  so  secured, 
resen-ed  or  taken  or  agreed  to  be  taken  shall  appear  in  or  from 
such  bond,  bill,  note,  assurance,  mortgage,  contract,  or  other- 
wise, shall  be  deemed  usurious,  and  are  hereby  dechired  to  bo 
void  from  the  beginning  ;  J'rovided,  Tliatthe  provisions  of  this 
section  shall  not  apply  to  uor  invalidate  the  collection  of  any 
negotiable  bill  of  exchange  or  promissory  note  purchased  of 
the  original  holder  in  good  faith  for  a  valuable  consideration 
before  the  maturity  of  tiie  same ;  and  Provided,  further,  That 
the  payment  of  interest  in  advance  for  any  time  not  exceeding 
ninety  days  at  a  rate  not  exceeding  12  per  cent,  per  annum 
shall  not  be  deemed  to  be  usury  within  the  meaning  of  this 
act."— Acts  O/1890,  ch.  184,  §  3. 

"In  all  written  contracts  for  the  loan  of  money  the  exact 
amount  agreed  upon  to  be  received  for  the  use,  by  the  borrower, 
shall  be  staled  in  the  contract,  and  separately  therefrom,  the 
rate  per  cent,  thereon  of  interest  contracted  to  be  charged,  and 
if  in  any  contract,  either  verbal  or  written,  for  the  loan  of 
money,  the  borrower  receives  a  less  sum  than  the  principal  sum 
so  agreed  upon  and  contracted  to  be  loaned  to  and  received  by 
tlie  Ijorrcjwer,  the  said  contract  shall  Ite  deemed  to  be  usurious 
except  as  otherwise  herein  provided." — Acts  o/1890,  ch.  18-i,  ^  4. 


INTEREST   STATUTES.  381 

"In  all  cases  where  the  original  owner  or  receiver  of  any 
usurious  bill  of  exchange  or  promissory  note,  shall  sell  or  part 
with  the  same  before  maturity  thereof,  or  without  giving  notice 
to  the  purchaser  or  receiver  of  such  bill  of  exchange  or  promis- 
sory note  of  its  usurious  character,  the  maker  of  such  usurious 
negotiable  bill  of  exchange  or  promissory  note,  or  his  legal 
representatives  or  assigns  may  recover  of  such  original  owner 
or  receiver,  or  from  any  broker  or  agent  or  person  who  pro- 
cured or  aided  or  assisted  in  inducing  and  procuring  the  execu- 
tion and  delivery  of  the  same,  jointly  or  severally,  the  full 
amount  of  the  principal  and  interest  named  in  and  represented 
by  such  bill  of  exchange  or  promissory  note,  the  interest  in  case 
of  recovery  to  be  computed  to  the  time  when  such  bill  of  ex- 
change or  promissory  note  shall  become  due  and  payable  ac- 
cording to  the  terms  thereof." — Acts  o/1890,  ch.  184,  §  5. 

"The  right  of  action  to  recover  from  the  origmal  owner  or 
receiver,  or  from  any  broker,  agent  or  person  who  aided  or 
assisted  in  inducing  and  procuring  the  execution  and  delivery 
by  any  person,  of  an  usurious  negotiable  bill  of  exchange  or 
promissory  note,  the  amount  of  the  principal  sum  named  in 
such  bill  or  note,  with  interest  tliereou  at  the  rate  specified  in 
such  bill  or  note  until  the  maturity  thereof  shall  arise  and  ac- 
ciue  and  be  complete  to  the  maker  of  such  usurious  negotiable 
bill  of  exchange  or  promissory  note,  or  to  his  legal  representa- 
tives or  assigns,  on  and  after  the  sale  before  maturity  of  such 
bill  of  exchange  or  promissory  note  by  such  original  owner  or 
receiver;  and  in  such  action  it  shall  not  be  necessary  for  the 
plaintiff  to  allege  or  prove  the  payment  of  such  usurious  nego- 
tiable bill  of  exchange  or  promissory  note;  nor  shall  the  pay- 
ment of  such  usurious  bill  of  exchange  or  promissory  note  be  a 
condition  precedent  to  the  collection,  f lom  the  original  owner 
or  receiver  of  such  bill  of  exchange  or  note,  or  from  any  broker, 
agent  or  person  in  anywise  a  party  to,  or  aiding  and  abetting 
in  the  soliciting  or  procuring  of  the  execution  and  delivery  of 
such  bill  of  exchange  or  promissory  note  sold  before  maturity, 
of  the  full  amount  specified  in  such  bill  of  exchange  or  prom- 
issory note,  with  interest  as  specified  therein  to  the  date  of 
maturity  thereof;  Provided,  That  the  provisions  of  this  section 
shall  not  apply  to  nor  prevent  the  collection  of  any  bond,  bill 
of  exchange,  promissory  note,  mortgage,  conveyance  or  other 
contract  of  security  while  in  the  bauds  of  the  original  or  any 
holder  who  has  not  participated  in  such  fee  or  compensation, 
nor  authorized  the  taking  of  the  same." — Acts  of  1890,  ch.  184, 
§6. 

"The  receipt  of  or  any  agreement  by  any  broker,  loan  agent 
or  person  to  receive  from  any  person  a  sum  of  money  or  other 


382  THE    LAW    OF    INTEREST. 

conskloration  as  a  fee  or  compensation  for  obtaining  a  loan  or 
forbearance  of  money,  or  an  extension  of  time  ou  an  existing 
loan  or  forbearance  of  money,  where  such  sum  of  money  or 
other  consideration  received  or  agreed  to  be  received,  as  a  fee 
or  compensation  by  such  broker,  loan  agent  or  person,  when 
added  to  the  late  of  interest  expressed  and  reserved  in  the 
bond,  bill  of  exchange,  promissory  note,  mortgage  or  otlier 
secnrity  made  or  given  to  evidence  or  to  secure  buch  loan,  ex- 
ceeds in  the  aggregate  the  rate  of  12  per  centum  per  annum, 
interest  shall  be  deemed  and  is  hereby  declared  to  be  nsury  within 
tiie  meaning  of  this  act,  and  all  and  every  bond,  bill  of  excliauge, 
promis-ory  note,  mortgage  or  other  contract  or  security,  thus 
or  in  like  manner  tainted  Avith  usury  or  usurious  purposes, 
shall  be  void  from  the  beginning  and  subject  to  the  same  pro- 
visions and  lialjilities  and  provisos,  and  the  maker  of  such  usu- 
rious bill  of  exchange,  promissory  note,  mortgage,  security  or 
other  contract  shall  have  the  same  remedy  in  the  law  against 
the  original  owner  or  receiver  of  any  such  usurious  bond,  bill, 
note,  mortgage,  or  other  contract  or  secnrity,  or  against  any 
broker,  agent,  or  person  who  procured,  or  aided  or  assisted  in 
procuring  the  execution  and  delivery  of  any  such  usurious  bond, 
bill,  note,  mortgage  or  other  contract  or  security,  as  is  provided 
for  by  the  precodins  sections  of  this  act." — Acts  of  \890,  ch. 
184,  §  7.  ^ 

"Every  person,  company  or  corporation  offending  against 
this  act  sliall  be  compelled  by  an  order  of  court  to  answer  on 
oath  any  complaint  that  ma}'  be  exhibited  or  filed  against  him 
in  the  district  court  for  the  proper  county  for  the  discovery  of 
any  sum  of  money,  goods,  or  things  so  taken,  accepted,  or  re- 
ceived in  violation  of  anv  of  the  foregoing  provisions." — Acts 
O/1890,  ch.  184,  §  8.        ' 

"Whenever  in  any  action  in  any  court  the  (|uestion  of  usury 
shall  be  raised  either  by  complaint  or  answer,  either  party  to 
the  action  may  be  a  witness  in  his  own  behalf  on  the  trial,  ex- 
cept in  actions  in  which  the  opposite  party  sues  or  defends  as 
administrator  or  personal  representative  of  a  deceased  person  ; 
except,  also,  actions  in  which  the  opposite  party  claims  as 
assignee  and  the  assignor  is  deceased.'" — Acts  of  1890,  ch.  184, 

§9. 

'•  Whenever  it  shall  satisfactorily  appear  to  a  court  that  any 
bond,  bill,  note,  assurance,  pledge,  mortgage,  contract,  security 
or  other  evidence  of  del)t  has  been  received  in  violation  of  the 
provisions  of  this  act,  the  court  shall  declare  the  same  to  be 
void,  and  enjoin  any  proceedings  thereon,  and  shall  order  the 
same  to  be  cancelled  and  delivered  up." — Acts  of  1890,  ch. 
184,  §10. 


INTEKEST   STATUTES.  383 

"  None  of  the  provisions  of  this  act  sliall  apply  to  any  build- 
ing ;iii(l  loan  association  incorporated  under  the  provisions  of 
any  law  of  this  SUitc."— Acts  o/1890,  ch.  184,  §  11. 

"The  taking,  receiving  or  accepting  of  a  greater  rate  of  in- 
terest upon  any  bond,  bill  of  exchange,  promissory  note,  mort- 
gage or  contract  for  the  use,  loan  or  forbearance  of  money  or 
tilings  in  action,  than  is  provided  by  law  is  usury." — Acts  of 
1891,  ch.  124,  §  1. 

"Any  person  or  persons,  compan}'  or  corporation,  which 
shall  take,  receive  or  accept  of  usury,  or  sell,  assign,  transfer, 
or  in  any  manner  dispose  of  any  usurious  bond,  bill  of  exchange 
or  contract  whatsoever,  knowing  the  same  to  be  usurious  with- 
out first  giving  such  purchaser  or  assignee  notice  of  its  usurious 
character,  shall  be  deemed  guilty  of  a  misdemeanor,  and  upon 
conviction  thereof  in  any  court  having  competent  jurisdiction 
shall  be  fined  not  less  than  twenty-five  (25)  nor  more  then  two 
hundred  (200)  dollars,  or  by  imprisonment  in  the  county  jail  not 
less  than  ten  nor  more  than  sixt}'  days,  or  both  fine  and  impris- 
onment in  the  discretion  of  the  court  for  each  and  every  such 
oSence."— Acts  o/1891,  ch.  124,  §  2. 


OHIO. 

"When  any  warrant  is  presented  to  the  county  treasurer  for 
payment,  and  the  same  is  not  paid,  for  want  of  money  belonging 
to  the  particular  fund  on  which  the  same  is  drawn,  the  treasurer 
shall  indorse  said  warrant,  '  Not  paid  for  want  of  funds,'  an- 
nexing the  date  of  its  presentment,  and  shall  sign  his  name 
thereto  ;  and  said  warrant  shall  thenceforth  bear  interest  at  the 
rate  of  six  per  centum  per  annum;  and  a  memorandum  of  all 
such  warrants  shall  be  kept  by  the  treasurer  in  a  book  used  for 
that  purpose."— 72.  S.,  §  1108. 

"  So  soon  as  there  are  sufficient  funds  in  the  treasury  of  the 
county,  to  redeem  the  warrants  drawn  thereon,  and  on  which 
interest  is  accruing,  the  county  treasurer  shall  give  notice  in 
some  newspaper  printed  in  his  county,  or  circulating  therein, 
that  he  is  read}^  to  redeem  such  warrants ;  and  from  the  date 
of  such  notice,  tlie  interest  on  such  warrants  shall  cease." — li. 
S..  §  1109. 

"  The  parties  to  a  bond,  bill,  promissory  note,  or  other  instru- 
ment of  writing  for  the  forbearance  or  payment  of  money  at 
an}'  future  time,  may  stipulate  therein  for  the  payment  of 
interest  upon  the  amount  thereof  at  any  rate  not  exceeding 
eight  per  centum  per  annum,  payable  annually." — M.  S., 
§3179. 


384  THE    LAW   OF    INTEREST. 

"Upon  1x11  jiulgmenls,  decrees,  or  orders,  rendered  upon  :iny 
bond,  l)ill,  note,  or  oilier  instrument  of  writing  containing  stii)- 
ulations  for  the  payment  of  interest  in  accordance  willi  tlie 
provisions  of  tlie  preceding  section,  interest  sliall  be  computed 
till  payment  at  the  rate  specified  in  such  instrument." — R.  S., 
§3180. 

"  In  cases  other  than  those  provided  for  in  the  two  preceding 
sections,  when  money  becomes  due  and  payable  upon  any  bond, 
bill,  note,  or  other  instrument  of  writing  hereafter  made,  ui)on 
any  book  account,  or  settlement  hereafter  made  between 
parties,  ui)on  all  verbal  contracts  hereafter  entered  into,  and 
upon  all  judgments,  decrees,  and  orders  of  any  judicial  tribunal 
for  the  payment  of  money  arising  out  of  a  contract  hereafter 
made,  or  other  transaction  which  hereafter  occurs,  the  creditor 
shall  be  entitled  to  interest  at  the  rate  of  six  per  cent,  per  annum, 
and  no  more." — E.  S.,  §  3181, 

"  All  creditors  shall  be  entitled  to  collect  and  receive  in- 
terest on  all  bonds,  bills,  notes,  and  other  written  instruments 
heretofore  entered  into,  upon  all  balances  struck  on  settlements 
heretofore  made,  upon  book  accounts  heretofore  accrued,  upon 
all  verbal  contracts  heretofore  made,  and  upon  all  judgments, 
decrees,  and  orders  of  courts  heretofore  rendered,  precisely  as 
if  this  chapter  had  not  passed." — 72.  S.,  §  3182. 

"Payments  of  money  or  property  made  by  way  of  usurious 
interest,  whether  made  in  advance  or  not,  shall  be  deemed  and 
taken,  as  to  the  excess  of  interest  a))ove  the  rate  allowed  by 
law  at  the  time  of  making  the  contract,  to  be  payments  made 
on  account  of  principal;  and  judgment  shall  be  renderetl  for 
no  more  than  the  balance  founil  due,  after  deducting  the  excess 
of  interest  so  paid.  No  debtor  shall  be  deemed  a  particeps 
criminis,  on  account  of  having  paid,  or  having  agreed  to  pay, 
such  exorbitant  interest,  but  he  shall  have  like  remedy  and 
relief  in  either  case;  and  no  bona  fide  indorsee  of  negotiable 
paper  purchased  before  due,  shall  be  affected  by  any  usury 
exacted  by  any  former  holder  of  such  paper,  unless  he  have 
actual  notice  of  the  usury  previous  to  his  purchase  ;  but  in  such 
cases,  the  amount  of  such  excess,  if  incorporated  into  negotia- 
ble paper,  may,  after  payment,  be  recovered  havk,  by  action 
against  the  partv  who  originally  exacted  the  usury."-  -72.  S., 
§  3183. 

"  AV^Iienever  usurious  interest  shall  have  been  charged  or 
taken  in  this  state  by  any  bank,  whether  incorporated  by  the 
laws  of  this  state  or  elsewhere,  it  shall  be  lawful  for  any  party 
or  parties  to  an  action  brought  u[)on  any  l)ond,  bill,  note,  or 
other   instrument   of  writing   in   which  such  usurious  interest 


INTEREST   STATUTES.  385 

shall  have  been  charged  or  inckided,  at  any  time  before  or  after 
judgment  to  set  np  and  prove  the  taking  or  demand  of  such 
usurious  interest,  witliout  tenden'ng  to  such  bank  the  legal 
amount  of  debt  and  interest  due  on  such  obligation." — R.  S., 
§  7590. 

"In  all  cases  in  which  judgment  shall  have  been  heretofore 
rendered  in  favor  of  such  l)ank  or  banks  u[)on  default,  or  upon 
a  warrant  of  attornc}'  to  confess  judgment,  it  shall  be  the  duty 
of  the  court  in  which  such  judgment  was  rendered,  at  any  time 
before  such  judgment  shall  have  been  satisfied,  upon  affidavit 
of  any  defendant  against  whom  such  judguient  was  rendered, 
setting  forth  the  facts  constituting  such  usurious  demand,  to 
set  aside  sucli  judgment,  and  i>errait  such  defendant  or  defen- 
dants to  file  his  or  their  answer  in  said  action,  setting  up  such 
usurious  demand,  without  tendering  to  such  bank  the  legal 
amount  of  debt  and  interest  due  on  the  bond,  bill,  note,  or 
other  obligation  upon  which  said  action  was  founded. —  R.  /S., 
§  7591. 

OKLAHOMA. 

"Whenever  a  loan  of  money  is  made,  it  is  presumed  to  be 
made  upon  interest,  unless  it  is  otherwise  expressly  stipulated 
at  the  time  in  writing." — St.^  §  910. 

"  Interest  is  the  compensation  allowed  for  the  use  or  for- 
bearance, or  detention  of  mone}',  or  its  equivalent." — St., 
§911. 

"  When  a  rate  of  interest  is  prescribed  by  a  law  or  contract, 
without  specifying  the  period  of  time  by  which  such  rate  is  to 
be  calculated,  it  is  to  be  deemed  an  annual  rate." — St.,  §  912. 

"  Under  an  ol)ligation  to  pay  interest,  no  rate  being  specified, 
interest  is  payable  at  the  rate  of  seven  per  centum  per  annum, 
and  in  the  like  proportion  for  a  longer  or  shorter  time  ;  but  in 
the  computation  of  interest  for  less  than  a  3'ear,  three  hundred 
and  sixty  days  are  deemed  to  constitute  aj'ear." — St.,  §  913. 

"The  highest  rate  of  interest  which  it  shall  be  lawful  for 
any  person  to  take,  receive,  retain,  or  contract  for  in  this  Ter- 
ritory, shall  be  twelve  per  cent  per  annum,  and  at  the  same  rate 
for  a  shorter  time. 

"Unless,  within  the  above  limitation,  there  is  an  express 
contract  in  writing  fixing  a  diflerent  rate,  interest  is  payable 
on  all  moneys  at  the  rate  of  seven  per  cent  per  annum,  after 
they  become  due  on  any  instrument  of  writing,  except  a  judg- 
ment, and  on  moneys  lent,  or  due  on  any  settlement  of  ac- 
counts, from  the  day  on  which  the  balance  is  ascertained,  and 
on  moneys  received  to  the  use  of  another  and  detained  from 
h\m."— St.,  §  914. 
25 


386  THE    LAW    OF    INTEREST. 

"The  interest  which  would  become  duo  at  tlie  end  of  the 
term  for  which  a,  loan  is  made,  not  exceeding  one  year's  interest 
ill  all,  may  be  deducted  from  the  loan  in  advance  if  the  parties 
thus  agree."— >6Y.,  §  915. 

"A  person  taking,  receiving,  retaining,  or  contracting  for 
an}'  higher  rate  of  interest  than  the  rate  of  twelve  per  cent 
per  annum,  shall  forfeit  all  the  interest  so  taken,  received,  re- 
tained, or  contracted  for ;  it  being  the  intent  and  meaning  of 
this  section  not  to  provide  a  forfeiture  of  any  i)ortion  of  the 
principal.  AVhen  a  greater  rate  of  interest  has  been  paid  than 
twelve  per  cent  per  annum,  the  person  {laying  it,  or  his  per- 
sonal representatives,  may  recover  the  excess  from  the  person 
taking  it,  or  his  personal  representative,  in  an  action  in  the 
l)roper  court." — St.,  §  916. 

"  Interest  is  payable  on  judgments  recovered  in  the  courts 
of  this  Territory,  at  the  rate  of  seven  per  cent,  per  annum,  and 
no  greater  rate,  but  such  interest  must  not  be  compounded  in 
any  manner  or  form." — St.,  §  917. 

"  Any  legal  rate  of  interest,  stipulated  by  a  contract,  re- 
mains chargeable,  after  a  breach  thereof,  as  before,  until  the 
contract  is  supersedetl  by  a  verdict  or  other  new  obligation." — - 
St.,  §  918. 

OREGON. 

"The  legislative  assemlil}' shall  not  pass  special  or  local 
laws  in  any  of  the  following  enumerated  cases,  that  is  to  sa}', 
—  .  .  in  relation  to  interest  on  money." — Const.,  art.  IV, 
§  23. 

"The  rate  of  interest  in  this  state  shall  be  eight  per  centum 
per  annum,  and  no  more,  on  all  moneys  after  the  same  become 
due;  on  judgments  and  decrees  for  the  payment  of  money  ;  on 
money  received  to  the  use  of  another  and  retained  be^'oud  a 
reasonal)le  time  without  the  owner's  consent,  expressed  or  im- 
j)lied,  or  on  money  due  upon  the  settlement  of  matured  accounts 
from  the  day  the  balance  is  ascertained;  on  money  due  or  to 
become  due  when  there  is  a  contract  to  pay  interest  and  no  rate 
s[)ecifled.  But  on  contracts,  interest  at  the  rate  of  ten  per 
centum  per  annum  may  be  charged  by  express  agreement  of 
the  parties,  and  no  more." — Laios,  §  3587. 

"  No  person  shall,  directly  or  indirectly,  receive  in  money, 
goods,  or  things  in  action,  or  in  any  other  manner,  any  greater 
sum  or  value  for  the  loan  or  use  of  money,  or  upon  contract 
founded  upon  any  bargain,  sale,  or  loan  of  wares,  mercliandise, 
goods,  ciiattels,  lands  and  tenements,  than  iu  this  chapter  pre- 
scribed."—  Laws,  §  3588. 


INTEREST   STATUTES.  387 

"  If  it  shall  be  ascertained  in  any  suit  brought  on  any  con- 
tract that  a  rate  of  interest  has  been  contracted  for  oVeater 
than  is  authorized  by  this  chapter,  either  directly  or  indirectly, 
in  money,  property,  or  other  valual)Ie  thing,  or  that  any  gift 
or  donation  of  money,  property,  or  otlier  valuable  thing  has 
been  made  or  promised  to  be  made  to  a  lender  or  creditor,  or 
to  any  person  for  him,  directly  or  indirectly,  either  by  the 
borrower  or  debtor,  or  any  person  for  him,  the  design  of  whicli 
is  to  obtain  for  money  so  loaned  or  for  debts  dne,  or  to  become 
due  a  rate  of  interest  greater  than  that  specified  by  the  pro- 
visions of  this  chapter,  the  same  shall  be  deemed  usurious,  and 
shall  work  a  forfeiture  of  the  entire  debt  so  contracted  to  the 
scliool  lund  of  the  county  where  such  suit  is  brought.  The 
court  in  which  such  suit  is  prosecuted  shall  render  judgment 
for  the  amount  of  the  original  sum  loaned  or  the  debt  con- 
tracted, without  interest,  against  the  defendant  and  in  favor  of 
the  state  of  Oregon,  for  the  use  of  the  common-school  fund  of 
said  county,  and  against  the  plaintiff  for  costs  of  suit,  whether 
such  suit  be  contested  or  not." — Laivs,  §  3589. 

"Notliing  in  this  act  shall  be  construed  to  prevent  the 
proper  honafide  assignee  of  any  usurious  contract  recovering 
against  his  immediate  assignor,  or  the  original  usurer,  the  fufi 
amount  paid  by  him  for  such  contract,  but  the  sanie  may  be 
recovered  by  proper  action,  in  any  court  having  competent  juris- 
diction ;  provided,  that  such  assignee  had  no  notice  of  the 
usury  affecting  tlie  contract." — Laws,  §  3590. 

"Judgments  and  decrees  for  money  upon  contracts  bearing 
more  than  six  per  centiun  interest,  and  not  exceeding  ten  per 
centum  i)er  annum,  shall  bear  the  same  interest  borne  by  such 
contracts;  provided,  however,  that  this  act  shall  not  be  so  con- 
strued as  to  affect  or  change  the  rate  of  interest  to  be  received 
by  virtue  of  any  contract  entered  into  before  this  act  shall  take 
effect." —  Laivs,  §  3591. 

"  This  act  shall  not  be  construed  so  as  to  affect  or  change 
the  rate  of  interest  to  be  received  by  virtue  of  any  contract 
entered  into  before  this  act  shall  take  effect." — Laws,  §  3592. 

"All  contracts  made  and  entered  into  in  this  state  by  and 
between  borrower  and  lender,  debtor  and  creditor,  or  mortgagor 
and  mortgagee,  on  whicli  the  rate  of  interest  is  eight  per  cent 
or  under,  whereby  one  party  shall  agree  to  pay  the  taxes  on 
the  debt,  credit,  or  mortgage  existing  or  entered  into  between 
such   parties,   be  and  tlie  same  are  hereby  declared  legal  and 

valid,   and   shall  not  be  deemed  or  taken  to  be  usurious." 

Laws,  §  3593. 

"  All  contracts  entered  into  under  section  3593  may  be  en- 


388  THE    LAW    OF    INTEREST. 

forced  b}'  Ihe  i:)arlics  lliereto  in  the  courts  of  this  state ;  pro- 
vided, that  in  luaking  the  assessments  of  credits,  loans,  or 
mortgages  the  same  sliall  be  assessed  to  the  holder  thereof  as 
now  provided  by  hvw." — Laivs,  §  3594. 

PENNSYLVANIA. 

Mutual  biiililing  associations  do  not  come  within  the  restric- 
tions of  the  usury  law. — B.'s  P.'s  Dig.,  p.  223,  §  2. 

"  No  executor  or  administrator  shall  be  liable  to  pay  interest 
but  for  the  suiplusage  of  tlie  estate  remaining  in  his  hands  or 
power  when  his  accounts  are  or  ought  to  be  settled  and  adjusted 
in  the  register's  office  :  Provided,  that  nothing  herein  contained 
shall  be  construed  to  exempt  an  executor  or  administrator  from 
liability  to  pay  interest,  when  he  may  have  made  use  of  the 
funds  of  the  estate  for  his  own  purposes,  previously  to  the  time 
when  his  accounts  are  or  ought  to  be  settled  as  aforesaid." — 
B.'s  P.'s  Dig.,  p.  o50,  t;  207. 

'•  Tlie  amount  of  interest  to  be  paid  in  all  cases  by  executors, 
administrators  and  guardians,  shall  be  determined  by  the  or- 
phans' court,  under  all  the  circumstances  of  tlie  case  ;  but  shall 
not,  in  any  instance,  exceed  the  legal  rate  of  interest  for  the 
time  being."— ZJ.'s  P.'s  Dig.,  p.  550,  §  208. 

"  The  lawful  rate  of  interest  for  the  loan  or  use  of  monc}'  in 
all  cases  where  no  express  contract  shall  have  been  made  for  a 
less  rate,  shall  be  six  per  cent,  per  annum." — B.'s  P.'s  Dig.,  p. 
926,  §  1,  This  includes  banking  corporations  b}'  act  of  May 
23,  1S78. 

"  "When  a  rate  of  interest  for  the  loan  or  use  of  money  ex- 
ceeding tliat  established  by  law  shall  have  been  reserved  or 
contracted  for,  the  borrower  or  debtor  shall  not  be  required  to 
pay  tlie  creditor  the  excess  over  the  legal  rat(^,  and  it  sliall  be 
lawful  for  such  borrower  or  debtor,  at  his  o^jtion,  to  retain  and 
deduct  such  excess  frosn  the  amount  of  any  such  debt ;  and  in 
all  cases  where  any  borrower  or  debtor  shall  heretofore,  or 
hereafter,  have  voluntarily  paid  the  whole  debt  or  sum  loaned, 
togetiier  with  interest  exceeding  the  lawful  rate,  no  action  to 
recover  back  any  such  excess  shall  be  sustained  in  any  court 
of  this  commonwealth,  unless  the  same  shall  have  been  com- 
menced within  six  months  from  and  after  the  time  of  such  pay- 
ment: Provided  ahvays.  That  nothing  in  this  act  shall  affect 
the  holders  of  negotiaiilc  paper  taken  bona  fide  in  the  usual 
coui-se  of  business." — B.'s  P.'s  Dig.,  p).  927,  §  2. 

"  Commission-mercliMnts  and  agents  of  parties  not  residing 
in  this  commonwealth,  l)c  and  they  are  hereby  authorized  to 
enter  into  an  agreement  to  retain  the  balances  of  money  in 


INTERE^.T   STATUTES.  389 

their  hands,  and  pay  on  the  same  a  rate  of  interest  not  exceed- 
ing seven  per  centum  per  annum,  and  receive  a  rate  of  interest 
not  exceeding  that  amount,  for  any  advance  of  money  made 
by  them  on  goods  or  merchandise  consigned  to  them  for  sale  or 
disposal :  Provided^  That  this  act  shall  only  apply  to  moneys 
received  from  or  held  on  account  of,  and  advances  made  upon 
goods  consigned  from  importers,  manufacturers  and  others 
living  and  transacting  business  in  places  beyond  the  limits  of 
the  state." — BJ's  P.'s  Dig.,  p.  927,  §  5. 

"  Whenever  any  railroad  or  canal  company  has  borrowed 
money  and  given  to  the  lender  thereof  a  bond  or  other  evidence 
of  indebtedness  in  a  larger  sura  than  the  amount  actually  re- 
ceived, such  transactions  shall  not  be  deemed  usurious,  or  in 
violation  of  any  law  of  this  connnon wealth  piohibiting  the 
taking  of  more  than  six  per  cent,  interest." — B.'s  P.'s  Dig., 
p.  927,  §  6. 

"Lawful  interest  shall  be  allowed  to  the  creditor  for  the 
sum  or  value  he  obtained  judgment  for,  from  the  time  the  said 
judgment  was  obtained  till  the  time  of  sale,  or  till  satisfaction 
be  made."— 5.'s  P.'s  Dig.,  p.  928,  §  9. 

"It  shall  be  lawful  for  any  party  or  parties,  in  whose  favor 
any  verdict  may  be  rendered  for  a  specific  sum  of  money,  to 
collect  and  receive  interest  upon  such  sum  from  the  date  oif  the 
verdict;  and  every  general  judgment  entered  upon  such  ver- 
dict, whether  by  a  court  of  original  jurisdiction,  or  by  the 
supreme  court,  shall  be  deemed  and  held  to  be  a  judgment  for 
the  sum  found  by  the  verdict,  with  interest  thereon  from  the  date 
of  such  finding:  Provided,  That  nothing  in  this  act  contained 
shall  prevent  any  court  from  directing  special  verdicts,  or 
entering  special  judgments,  whenever  the  same  shall  be  deemed 
just  and  proper." — B.'s  P.'s  Dig.,  p.  928,  §  10. 

RHODE    ISLAND. 

Interest  is  allowed  on  taxes. — P.  S.,  cli.  44,  §  21. 

"Interest  in  the  rendition  of  judgments  and  in  all  business 
transactions  where  interest  is  secured  or  paid  shall  be  computed 
at  the  rate  of  six  dollars  on  a  hundred  dollars  for  one  year  un- 
less a  different  rate  is  expressly  stipulated." — P.  S.,cli.  141,  §  1. 

"Whenever  any  foreign  bill  of  exchange  is  or  shall  be  drawn 
or  endorsed  within  this  state  for  the  payment  of  any  sum  of 
monc}',  and  such  bill  is  or  shall  be  returned  from  anyplace  or 
country  without  the  limits  of  the  United  States,  protested  for 
non-accei)tance  or  non-payment,  the  drawer  or  endorser  shall  ])e 
subject  to  the  payment  of  ten  per  centum  damages  thereon  and 


390  THE    LAW    OF   INTEREST. 

charges  for  protest,  and  the  bill  shall  carry  an  interest  of  six  per 
centiiiii  per  annum  from  the  date  of  the  protest." — P.  S.,  ch. 
142,  §  1. 

"Anv  person  having  a  right  to  demand  any  sum  of  nione^' 
upon  a  foreign  protested  bill  of  excluingc  as  aforesaitl  may  com- 
mence and  prosecute  an  action  for  principal,  damages,  interest 
;ind  charges  of  i)rotest  against  the  drawers  and  endorsers,  jointly 
(.r  severally,  or  against  either  of  them  separately;  and  judgment 
shall  and  may  be  given  for  such  i)rincii)al,  damages  and  charges 
and  interest  upon  such  principal  after  the  rate  aforesaid,  to  the 
time  of  such  judgment,  together  with  costs  of  suit."— P.  aS'.,  ch. 
142.  §  2. 

"Whenever  any  inland  bill  of  exchange  shall  be  drawn  or  en- 
dorsed within  this  state  for  the  payment  of  any  sum  of  money 
without  the  same,  and  such  bill  shall  be  protested  for  non-ac- 
ceptance or  non-payment,  the  drawer  or  endorser  shall  be  sub- 
ject to  the  payment  of  five  per  centum  damages  thereon  and 
charges  of  piotest,  and  the  bill  shall  carry  an  interest  of  six 
per  centum  per  annum  from  the  date  of  the  [)rotest." — P.  S.,  cJi. 
142,  §  3. 

Corporations,  whose  franchises  have  been  sold  on  execution, 
"ma}-,  at  any  time  within  three  months  from  the  time  of  such 
sale,  redeem  the  franchise  by  i)aying  or  tendering  to  the  pur- 
chaser thereof  the  sum  that  he  shall  have  paid  therefor,  with 
twelve  per  centum  interest  thereon,  but  without  any  allowance 
for  toll  which  he  may  have  received  ;  and  upon  such  payment  or 
tender,  the  said  franchise  and  all  the  rightsand  privileges  thereof 
.shall  revert  and  belong  to  said  corporation  as  if  no  such  sale 
ha.l  been  made."— 7^  S.,  ch.  152,  §  14. 

Executors  "may  be  compelled  to  pay  interest  for  the  deten- 
tion of  money  in  their  hands,  if  in  the  opinion  of  such  [pro- 
bate] court  it  shall  be  reasonal)le."— 7'.  S.,  ch.  190,  §  9. 

"Every  judgment  for  debt  or  damages  shall  draw  interest  on 
such  debt  or  damages  from  the  time  of  its  rendition  to  the  time 
of  its  discharge."— P.  S.,  ch.  21G.  §  9. 

"Verdicts,  awards  of  referees  and  reports  of  masters  in  chan- 
cery or  of  auditors,  ascertaining  amounts  due  from  party  to  party 
by  way  of  debt  or  damages,  shall,  if  and  in  so  far  as  confained 
by  judgment  or  decree,  draw  interest  on  such  debt  or  damages  ; 
if  a  verdict,  from  the  time  the  same  is  rendered,  and  if  an  award 
or  report,  from  the  time  the  same  is  dated  or  made  up  :  Pro- 
vided, there  be  nothing  in  the  verdict,  award  or  report  to  the 
contrary  thereof  or  plainly  inconsistent  therewith." — P.  ^.,  ch. 
210.  §  10. 

"The  appellee  in  any  case  a[)pealetl  from  the  court  of  common 


INTEREST    STATUTES.  391 

pleas  to  the  supreme  court,  brought  upon  any  bond  or  promis- 
sory note  for  money  or  upon  any  bill  of  exchange  against  the 
acceptor  thereof,  whether  interest  be  payable  thereon  or  not, 
who  shall  recover  in  the  supreme  court,  shall  recover  double  costs 
in  said  court  and  double  interest  on  the  debt  from  the  day  of  the 
judgment  of  the  court  of  common  pleas  appealed  from  to  the 
time  of  the  final  trial  in  the  supreme  court :  Provided^  that  if 
the  suj)reme  court  on  such  final  trial  shall  be  satisfied  that  the 
appellant  had  reasonable  ground  of  defence  and  that  such  appeal 
was  not  solely  for  delay,  they  shall  allow  only  simple  interest 
from  the  day  of  the  judgment  of  the  court  of  common  pleas 
appealed  from  to  the  time  of  such  final  trial,  with  single  costs." 
—P.  S.,  ch.  217,  §  13. 

"If  in  any  action  for  such  cause  originally  brought  in  the  su- 
preme court,  a  verdict  be  recovered  by  the  plaintitf,  and  a  mo- 
tion for  a  new  trial  be  filed  therein  by  the  defendant  and  allowed 
as  of  course,  and  judgment  be  afterwards  rendered  in  favor  of 
the  plaintiff  upon  verdict,  by  default  or  on  submission,  the  de- 
fendant may,  in  the  discretion  of  the  court,  be  adjudged  to  pay 
double  costs  and  double  interest  on  the  debt  accruing  or  taxa- 
ble after  the  filing  of  such  written  motion." — P.  S.,  ch.  217,  §  14. 

"If  the  appellant  [from  the  court  of  common  pleas  to  the  su- 
preme court]  shall  neglect  to  enter  his  appeal,  as  by  laAV  required, 
the  adverse  party,  in  case  he  did  not  also  appeal,  ma}^  at  any 
time  during  the  term  appealed  to,  or  at  the  next  succeeding  terra, 
enter  his  complaint  and  obtain  a  confirmation  of  the  former  judg- 
ment, as  of  the  third  da}^  of  the  said  term,  with  double  interest 
from  the  time  of  the  rendition  of  the  judgment  appealed  from, 
to  said  third  dav,  if  damages  were  therein  given,  and  double 
costs."— P.  /S.,  ch.  218,  §  9. 

"In  case  of  such  neglect,  if  the  court  appealed  to  shall  be 
satisfied  that  the  appellant  had  reasonable  grounds  of  appeal 
and  that  the  appeal  was  not  taken  solely  for  delay,  single  inter- 
est on  the  damages  and  single  costs  only  shall  be  required  of 
him."— P.  S.,  ch.  218,  §  10. 

"Every  sheriff,  deputy  sheriff  and  town  sergeant,  charged  with 
the  service  of  any  execution  issued  by  the  supreme  court  or  court 
of  common  pleas,  for  any  debt  or  damages,  shall  levy,  collect, 
receive  and  pay  over  interest  on  the  same  debt  or  damages,  from 
the  date  entered  on  the  margin,  up  to  the  time  of  its  discharge 
by  him."— P. -S.,  ch.  223,  §  27. 

SOUTH  CAROLINA. 

"In  all  money  decrees  and  judgments  of  courts  enrolled  or 
entered,  in  all  cases  of  accounts  stated,  and  in  all  cases  wherein 


392  THE    LAW    OF    INTEREST. 

any  sum  or  sums  of  money  sluill  be  ascertained  and,  being  due, 
shall  draw  interest  according  to  law,  the  legal  interest  shall  be 
at  the  rate  of  seven  per  centum  per  annum." — G.  S.,  §  12«9. 

''Where  any  bill  of  exchange  is  or  shall  be  drawn  for  the 
payment  of  any  sum  of  money,  for  value  received,  and  such 
bill  shall  be  protested  for  non-acceptance  or  non-payment,  the 
same  shall  carry  interest  from  the  time  such  bill  shall  become 
due  and  payable,  at  the  rate  of  seven  per  cent,  per  annum,  until 
the  money  therein  drawn  for,  together  witli  damages  and  costs, 
be  fully  satisfied  and  paid."— G.  S.,  §  1298. 

'•No  greater  rate  of  interest  than  seven  (7)  per  centum  per 
annum  shall  be  charged,  taken,  agreed  upon  or  allowed  ui)()n 
any  contract  arising  in  this  State  lor  the  hiring,  lending  or  use 
of  money  or  other  commodity  except  upon  written  contracts, 
wherein,  by  express  agreement,  a  rate  of  interest  not  exceeding 
ten  per  cent,  may  be  charged. 

"No  person  or  corporation  lending  or  advancing  money  or 
other  commodity  upon  a  greater  rate  of  interest  shall  be  allowed 
to  recover  in  any  Court  of  this  State  any  portion  of  the  interest 
so  unlawfully  charged  ;  and  the  principal  sum,  amount  or  value 
so  lent  or  advanced,  without  any  interest,  shall  be  deemed  and 
taken  by  the  Courts  of  this  State  to  be  the  true  legal  debt  or 
measure  of  damages  to  all  intents  and  purposes  whatsoever, 
to  be  recovered  without  costs.— ^4d.9  of  1882,  No.  21,  §  1. 

"Any  person  or  cor[)oration  who  shall  receive  as  interest  any 
greater  amount  than  is  herein  provided  for  shall,  in  addition  to 
the  forfeiture  herein  provided,  forfeit  also  double  tlie  sum  so 
received,  to  be  collected  by  a  separate  action,  or  allowed  as  a 
counter-claim  to  any  action  brought  to  recover  the  princii)al 
sum."— Acts  of  1882,  No.  21,  §  2. 

SOUTH  DAKOTA. 

"All  county  orders  hereafter  drawn  by  the  proper  authorities 
of  any  county  shall  after  having  been  presented  to  the  county 
treasurer  of  the  respective  counties  and  by  him  indorsed,  'Not 
paid  for  want  of  funds  in  the  treasury,"  from  said  date  draw 
interest  at  the  rate  of  seven  per  cent,  per  annum."  —  Comp. 
Laics,  §  618. 

"On  the  first  Monday  of  February  of  the  year  after  which 
taxes  shall  have  l)een  assessed,  all  unpaid  taxes  shall  become 
delinquent,  and  shall  draw  interest  at  the  rate  of  ten  per  cent, 
per  annum  from  the  date  of  such  delinquency." — Comp.  Laics, 
§  IGIO. 

Land  sold  fur  taxes,  may  be  rcdeemcil  by  pay  inn  the  sum 
mentione<l  in  the  certificate  of  sale,  "and  interest  thereon  at 
the  rate  of  thirty  i)cr  cent,  per  annum  from  the  date  of  purchase, 


INTEREST    STATUTES.  393 

together  with  all  other  taxes  subsequently  paid,  whether  for 
any  year  or  years  previous  or  subsequent  to  said  sale,  aud  in- 
terest thereon  at  the  same  rate  from  the  date  of  sueh  payment." 
— Com}).  Lait'S,  §  1635. 

"Legacies  bear  interest  from  the  time  when  they  are  due  and 
payable,  except  that  legacies  for  maintenance,  or  to  the  testa- 
tor's widow,  bear  interest  from  the  testator's  decease." — Co7np. 
Laws,  §  3390. 

When  a  partial  payment  is  made  it  shall  be  first  applied  to 
the  payment  of  interest  due  at  the  time. — Com}-).  Laws,  §  3457. 

"An  offer  of  payment  or  other  performance,  duly  made, 
though  the  title  to  "the  thing  offered  be  not  transferred  to  the 
creditor,  stops  the  running  of  interest  on  the  obligation,  and 
has  the  same  effect  upon  all  its  incidents  as  a  performance 
thereof." — Comp.  Laivs^  §  3477. 

"Whenever  a  loan  of  money  is  made,  it  is  presumed  to  be 
made  upon  interest,  unless  it  is  otherwise  expressly  stipulated 
at  ihe  time  in  writing," — Comp.  Laivs,  §  3717. 

"Interest  is  the  compensation  allowed  for  the  use,  or  forbear- 
ance, or  detention  of  money,  or  its  equivalent."— Co wj».  Laws, 
§  3718. 

"When  a  rate  of  interest  is  prescribed  by  a  law  or  contract, 
without  specifying  the  period  of  time  by  which  such  rate  is  to 
be  calculated,  it  is  to  be  deemed  an  annual  rate." — Coynp.  Laws, 
§3719. 

"Under  an  obligation  to  pay  interest,  no  rate  being  specified, 
interest  is  payable  at  the  rate  of  seven  per  centum  per  annum, 
and  in  the  like  proportion  for  a  longer  or  shorter  time ;  but  in 
the  computation  of  interest  for  less  than  a  year,  three  hundred 
and  sixty  days  are  deemed  to  constitute  a  year." — Comp.  Laws, 
§  3720. 

"1.  The  highest  rate  of  interest  which  it  shall  be  lawful  for 
any  person  to  take,  receive,  retain,  or  contract  for  in  this  terri- 
tory [state],  shall  be  twelve  per  cent,  per  annum,  and  at  the 
same  rate  for  a  shorter  time;  except  in  the  counties  of  Law- 
rence, Pennington,  Custer,  Mandan,  and  Forsythe,  wherein  it 
shall  be  lawful  to  take,  receive,  retain,  and  contract  for  any 
rate  agreed  on  between  the  parties. 

"2. "^Unless,  within  the  above  limitation,  there  is  an  express 
coutract  in  writing  fixing  a  different  rate,  interest  is  payable 
on  all  moneys  at  the  rate  of  seven  per  cent,  per  annum,  after 
thev  become  due  on  any  instrument  of  writing,  except  a  judg- 
ment, and  on  monevs  lent,  or  due  on  any  settlement  of  accounts, 
from  the  day  on  which  the  balance  is  ascertained,  and  on  mon- 
evs received  to  the  use  of  another  and  detained  from  him."— 
Comp.  Laws.,  §  3721. 


394  THE    LAW    OF    INTEREST. 

"The  interest  which  woulil  l)ocoinG  due  at  tlie  end  of  tlie  term 
for  wliicii  :i  loan  is  made,  not  exceeding  one  year's  interest  in 
all,  may  be  dedncted  from  the  loan  in  advance  if  the  parties 
thns  agree."— Cawp.  Laivs,  §  3722. 

"A  person  taking,  receiving,  ix'taining,  or  contracting  for 
any  higher  rate  of  interest  than  the  rate  of  twelve  per  cent,  per 
annnm,  shall  forfeit  all  the  interest  so  taken,  received,  retained, 
or  contracted  for  ;  it  being  the  intent  and  meaning  of  this  sec- 
lion  not  to  provide  a  forfeiture  of  any  portion  of  the  i)rincipal. 
When  a  greater  rate  of  interest  has  been  paid  than  twelve  per 
Ci^t.  per  annum,  the  person  paying  it,  or  his  personal  re[)resent- 
alive,  may  recover  the  excess  from  the  person  taking  it,  or  his 
personal  representative,  in  an  action  in  the  proper  court." — 
Comp.  Laics,  §  3723. 

"Interest  is  payal)le  on  judgments  recovered  in  the  courts  of 
this  territory  [stale],  at  the  rate  of  seven  per  cent,  per  annum, 
and  no  greater  rate;  but  such  interest  must  not  be  conii)ounded 
in  any  manner  or  Ibrm." — Com]).  Laws,  §  3724. 

"Any  legal  rate  of  interest  stipulated  by  a  contract,  remains 
chargealdc  after  a  breach  thereof,  as  before,  until  the  contract 
is  superseded  by  a  verdict  or  other  new  obligation." — Comp. 
Laws,  §  3725. 

A  trustee  ma}',  at  the  option  of  the  beneficiary,  be  required 
to  account  for  all  i)rolits  he  has  made  for  himself  IVom  the  trust 
fund,  "or  to  pay  the  value  of  its  use,  and,  if  he  has  disposed 
thereof,  to  replace  it,  with  its  fruits,  or  to  account  for  its  pro- 
ceeds with  interest." — Comp.  Laics,  §  3930. 

If  a  trustee  omits  to  invest  the  trust  moneys  as  fast  as  he 
collects  a  sufficient  amount  "he  must  i)ay  simple  interest  tliere- 
on  if  such  omission  is  negligent  merely,  and  comi)ound  interest 
if  it  is  wilful." — Comp.  Laws,  §  31)44. 

"Upon  a  contract  of  bottomry,  the  parties  may  lawfully  stip- 
ulate for  a  rate  of  interest  higher  than  that  allowed  by  the  law 
u|)on  other  contracts.  But  a  comi)etent  court  may  reduce  the 
rate  stipulated  when  it  appears  unjvistifiable  and  exorbitant." 
— Comp.  Laws,  §  4423. 

"Every  i)erson  who  is  entitled  to  recover  damages  certain, 
or  capable  of  being  made  certain  by  calculation,  and  the  right 
to  recover  which  is  vested  in  him  u|)on  a  particular  day,  is  en- 
tilled  also  to  recover  interest  thereon  from  that  day,  excei)t 
during  such  time  as  the  debtor  is  j)revented  l)y  law,  or  by  the 
act  of  the  creditor,  from  paying  the  debt." — Comp.  Laws,  § 
4577. 

"In  an  action  for  the  breach  of  an  obligation  not  arising 
from  contract,  and  in  every  case  of  oppression,  fraud,  or  malice, 
interest  may  i)e  given,  iu  the  discretion  of  the  jury." — Comp. 
Laws,  §  4578.. 


INTEREST    STATUTES.  395 

"Accepting  payment  of  the  whole  principal,  as  such,  waives 
all  claim  to  interest." — Comp.  Laws,  §  4579. 

"The  detriment  caused  by  the  breach  of  an  obligation  to  pay 
money  only  is  deemed  to  be  the  amount  due  by  the  terms  of 
the  obligation,  with  interest  thereon." — Comp.  Laios,  §  4582. 

''The  words  'compound  interest'  mean  interest  added  to  the 
principal  as  the  former  becomes  due,  and  thereafter  made  to 
bear  interest." — Comp.  Laws,  §  4761. 

"When  the  judgment  is  for  the  recovery  of  money,  interest 
from  the  time  of  the  verdict  or  report,  until  judgment  be  finally 
entered,  must  be  computed  by  the  clerk  and  added  to  the  costs 
of  the  party  entitled  thereto." — Comp.  Laivs,  §  5196. 

If  the  whole  of  mortgaged  premises  are  sohl,  "the  proceeds 
of  such  sale  must  be  applied  as  well  to  the  interest  or  portion 
or  installment  of  the  principal  due,  as  towards  the  whole  or 
residue  of  the  sum  secured  by  such  mortgage,  and  not  due  and 
payable  at  the  time  of  such  sale,  and  if  such  residue  do  not  bear 
interest,  then  the  court  may  direct  the  same  to  be  paid,  with  a 
rebate  of  the  legal  interest  for  the  time  during  which  residue 
shall  not  be  due  and  payable,  or  the  court  may  direct  the  bal- 
ance of  the  proceeds  of  such  sale,  after  paying  the  sum  due, 
with  costs,  to  be  put  out  at  interest  for  the  benefit  of  tlie  plain- 
tiff, to  be  paid  to  him  as  the  installments  or  [)ortions  of  the 
principal  or  interest  may  become  due,  and  the  surplus  for  the 
benefit  of  the  defendant,  his  representatives  or  assigns,  to  be 
paid  to  them  by  order  of  the  court." — Comp.  Laws,  §  5445. 

If  the  estate  of  a  deceased  person  "is  insolvent,  no  greater 
rate  of  interest  shall  be  allowed  upon  any  claim,  after  the  first 
pul)lication  of  notice  to  creditors,  than  is  allowed  by  law  en 
judgments  obtained  in  the  district  court." — Comp.  Laws,  § 
5791. 

"If  there  be  any  debt  of  the  decedent  bearing  interest, 
whether  presented  or  not,  the  executor,or  administrator  may, 
by  order  of  the  probate  court,  pay  the  amount  then  accumulated 
and  unpaid,  or  any  part  thereof,  at  any  time  when  tliere  are 
sufficient  funds  properly  applicable  thereto,  whether  said  claim 
be  then  due  or  not ;  and  interest  shall  thereu[)on  cease  to  accrue 
upon  the  amount  so  paid." — Comp.  Laws,  §  5811. 

When  the  real  estate  of  a  minor  is  sold  by  a  guardian,  the 
guardian  must  apply  the  proceeds  of  the  sale  to  the  purpose 
for  which  the  sale  was  made,  "as  far  as  necessary,  and  put  out 
the  residue,  if  any,  on  interest,  or  invest  it  in  the  best  manner 
in  his  power,  until  the  capital  is  wanted  for  the  maintenance  of 
the  ward  and  his  family,  or  the  education  of  his  children,  or 
for  the  education  of  the  ward  when  a  minor,  in  which  case  the 


39G  THE    LAAV    OF    INTEREST. 

capital  may  be  used  for  that  purpose,  as  far  as  may  be  neces- 
sar\',  ill  liivo  luaiiiier  as  if  it  had  been  i)ersonal  estate  of  tlie 
ward." — Comp.  Laws,  §  6011. 

"Every  person  who  directly  or  iudiroctly  receives  any  interest, 
discount  or  consideration  upon  the  loan  or  forbearance  of  any 
money,  goods  or  things  in  action  greater  than  is  allowed  by 
law  is  guilty  of  a  misdemeanor." — Acts  o/1889,  ch.  133,  §  1. 


TENNESSEE. 

"In  taking  judgment  against  a  delinquent  ofTicer,  interest  at 
the  rate  of  six  pi-r  cent,  on  tlie  amount  which  he  has  failed  to  pay 
over  shall  be  added,  and  twelve  and  one-lialf  percent,  damages 
thereon." — Code,  §  914. 

"Interest  is  the  compensation  which  may  be  demanded  by  Mie 
lender  from  the  borrower,  or  the  creditor  from  the  del)tor  for 
the  use  of  money."— Code,  §  2700. 

"The  amount  of  saitl  compensation  shall  be  at  the  rate  of  six 
dollars  for  the  use  of  one  hundred  dollars  for  one  year;  and 
every  excess  over  that  rate  is  usury." — Code,  §  2701. 

"AH  bills  single,  bonds,  notes,  bills  of  excliange,  and  liqui- 
dated and  settled  accounts,  signed  by  the  debtor,  shall  bear  in- 
terest from  the  time  tliey  l)ecome  due,  unless  it  is  expressed  that 
interest  is  not  to  accrue  until  a  specidc  time  therein  mentioned." 
—Code,  §  2702. 

"The  time  from  whicli  interest  may  be  computed  shall  be  the 
day  when  the  debt  is  payable,  unless  another  day  be  fixed  in  the 
contract  itself." — Code,  §  2703. 

"If  the  debt  be  payable  on  demand,  the  interest  shall  be  com- 
puted from  the  day  of  the  demand  ;  and  suing  for  the  debt  shall 
be  equivalent  to  an  actual  demand." — Code,  §  2704. 

"Interest  shall  be  computed  on  every  judgment  from  the  day 
on  which  it  was  entered  up." — Code,  §  2705. 

"The  amount  ui)on  which  interest  may  be  computed  shall  l)e 
the  sum  expressed  in  tlie  contract;  and  if  the  contract  be  for 
the  payment  or  delivery  of  i)roperty,  or  any  specific  article  or 
articles,  the  value  of  the  same  in  dollars,  to  bo  ascertained  by 
the  triers  of  the  suit,  shall  be  the  amount  on  which  interest  shall 
be  computed." — Code,  §  2706. 

"A  defendant  sued  for  money  may  avoid  the  excess  over  le- 
<Tal  interest,  by  a  plea  setting  forth  the  amount  of  the  usury." 
—Codr,  §  2707. 

"If  the  defendant  be  the  original  debtor,  his  surety,  or  accom- 
modation endorser,  he  shall  verify  the  plea  by  an  allidavit  that 
it  is  true.     If  the  defendant  be  the  personal  representative  of 


INTEREST   STATUTES.  397 

the  original  debtor,  he  may  verify  the  plea  by  an  affidavit  that 
he  has  good  reason  to  believe,  and  does  believe,  the  plea  to  be 
trne."— Cor7e,  §  2708. 

"If  the  plaintiff  be  the  original  creditor,  he  shall  deny  the 
usury,  or  slate  the  amount  of  usury  in  his  replication,  which  he 
shall  verify  by  an  affidavit  of  its  truth.  If  the  plaintiff  is  an 
endorsee  or  other  holder,  and  deny  the  usury,  he  shall  verify  the 
replication,  either  by  an  affidavit  of  its  truth  by  the  original 
creditor,  or,  if  the  original  creditor  is  dead,  or  removed  from 
the  county,  or  refuses  to  make  the  affidavit,  that  there  was  no 
usury  in  the  transaction  to  his  knowledge.  And  where  the  plain- 
tifl'  is  a  personal  representative,  if  he  deny  the  usury  in  the  rep- 
lication, it  shall  be  supported  by  an  affidavit  that  he  has  no 
knowledge  that  there  was  usury  in  the  contract." — Code,  §  2709. 

"If  the  replication  admit  the  usury,  or  is  not  supported  by  the 
affidavit  aforesaid,  the  judgment  shall  be  that  the  plaintiff  re- 
cover the  principal  and  legal  interest,  and  no  more.  If  the  rep- 
lication is  supported  by  an  affidavit,  the  judgment  shall  be  that 
the  plaintiff  recover  the  amount  claimed,  unless  the  defendant 
prove  the  usury,  in  which  case  it  shall  be  deducted  from  the 
claim,  and  the  judgment  shall  be  for  the  balance.  But  if  there 
are  other  defences,  they  shall  be  disposed  of." — Code,  §  2710. 

"This  remedy  at  law  against  usury  shall  not  prevent  the  party 
from  having  relief  in  equity." — Code,  §  2711. 

"If  usurious  interest  has  been  paul,  the  same  may  be  recov- 
ered by  action  at  the  suit  of  the  party  from  whom  it  was  taken, 
or  his  representative  ;  or  it  may  be  subjected  by  any  judgment 
creditor  of  such  party  to  the  satisfaction  of  his  debt." — Code, 
§  2712. 

"In  settlements  with  a  guardian,  he  shall  not  be  chargeable 
with  compound  interest,  if  he  can  show  that  he  did  not  and  could 
not  have  received  compound  interest  on  the  debts  due  the  estate 
of  his  ward."— Code,  §  3406. 

"In  all  cases  of  affirmance  of  the  judgment,  or  dismissal  of 
the  writ  for  any  cause,  where  the  original  judgment  has  been 
superseded,  judgment  shall  be  rendered  against  the  plaintiff  in 
error  and  his  sureties  for  the  amount  of  the  former  judgment, 
with  interest  at  the  rate  of  twelve  and  one-half  per  cent,  per  an- 
num from  the  rendition  thereof,  and  all  costs." — Code,  §  3827. 
'U[)on  affirmance  of  thejudgment  or  decree  below,  or  recov- 
ery of  a  larger  amount,  or  upon  dismissal  of  the  certiorari  for 
want  of  prosecution,  or  for  any  other  cause,  the  court  shall  en- 
ter up  judgment  for  the  amount  recovered  against  the  i)rincipal 
and  the  sureties  to  the  prosecution  bond,  with  interest  at  the 
rate  of  six  per  cent,  per  annum  from  the  date  of  thejudgment 
or  decree  below,  and  all  costs." — Code,  §  3853. 


398  THE    LAW    OF    INTEREST. 

"On  affirmance  of  decrees  in  equity  cases  for  money,  interest 
sljall  be  recovered  at  the  rate  of  six  per  cent,  per  annum."  — 
Code,  §  3884. 

"If  it  be  made  to  appear  in  the  action  that  usurious  interest 
has  been  intentionally  taken  or  reserved,  the  person  taking  or 
reserving  such  usury  shall  pay  full  costs." — Code,  §  3'J30. 

•'No  person  shall  receive,  by  way  of  compensation  for  the 
use  of  money,  more  than  at  the  rate  of  six  dollars  for  the  use 
of  one  hundred  dollars  for  one  year." — Code,  §  5622. 

"The  punishment  of  this  offence  shall  be  a  fine  in  no  case 
less  than  ten  dollars,  nor  more  than  the  amount  of  the  usury 
received,  to  be  ascertained  by  the  jury.  In  case  the  defendant 
p!cad  guilty  to  the  charge,  or  judgment  go  against  him  ou  a 
plea  in  abatement,  a  jury  shall  be  sworn  to  ascertain  the  amount 
of  the  usury  received." — Code,  §  5G23. 


TEXAS. 

"The  legal  rate  of  interest  shall  not  exceed  eight  per  cent, 
per  annum,  in  the  absence  of  any  contract  as  to  the  rate  of  in- 
terest ;  and  by  contract  parties  may  agree  upon  any  rate  not  to 
exceed  twelve  per  cent,  per  annum.  All  interest  charged  above 
this  last  named  rate  shall  be  deemed  usurious." — Consf.,  art. 
XVI,  §  11. 

An  answer  "that  the  contract  sued  upon  is  usurious"  "must 
be  verified  by  affidavit"  "unless  the  truth  of  the  pleadings  ap- 
pear of  record." — S.'s  Civ.  St.,  §  1265. 

"The  rate  of  interest  in  any  other  state,  territory  or  country 
is  presumed  to  be  the  same  as  that  established  by  law  in  this 
state,  and  may  be  recovered  accordingly  without  allegation  or 
proof  of  the  rate  of  interest  in  such  other  state,  territory  or 
country,  unless  the  rate  of  interest  in  such  other  country  be 
alleged  and  proved."— ^.'s  Cic.  St.,  §  2261. 

"if  the  surplus  money  in  the  hands  of  the  guardian  belong- 
ing to  the  ward  cannot  be  invested  or  loaned  at  interest  as 
directed  in  this  chapter,  after  due  diligence  to  do  so  by  the 
guardian,  he  shall  be  liable  for  the  principal  only  of  such  money. 
But  if  the  guardian  neglects  to  invest  such  money  or  loan  the 
same  at  interest  when  he  could  do  so  by  the  use  of  reasonable  dil 
igence,  he  shall  be  liable  for  the  principal  and  also  for  the  high- 
est legal  rate  of  interest  upon  such  principal  for  the  time  he  so 
neglects  to  invest  or  loan  the  same." — S.'s  Civ.  St.,  §  2567. 

"  'Interest'  is  the  compensation  allowed  by  law  or  fixed  by 
the  parties  to  a  contract  for  the  use  of  forbearance  or  detention 
of  monev." — S.'s  Cic.  St.,  §  2'J72. 


INTEREST    STATUTES.  399 

"  'Legal  interest'  is  that  interest  which  is  allowed  by  law 
when  the  parties  to  a  contract  have  not  agreed  upon  any  par- 
ticular rate  of  interest." — S.'s  Civ.  St.,  §  2973. 

"  'Conventional  interest'  is  that  interest  which  is  agreed  upon 
and  fixed  by  the  parties  to  a  written  contract,  not  to  exceed 
twelve  per  cent,  per  annum." — S.'s  Civ.  St.,  §  2974. 

"The  distinction  between  legal  and  conventional  interest  shall 
be  known  and  recognized  by  the  laws  of  this  state." — S.'s  Civ. 
St.,  §  2975. 

"On  all  written  contracts  ascertaining  the  sum  payable,  when 
uo  specified  rate  is  agreed  upon  by  the  parties  to  the  contract, 
interest  shall  be  allowed  at  the  rate  of  six  per  cent  per  annum 
from  and  aftei'  the  time  when  the  sum  is  due  and  payable." — 
S.'s  Civ.  St.,  §  2976,  as  amended  by  Acts  of  1891,  ch.  68. 

"On  open  accounts,  when  no  specified  rate  is  agreed  upon  by 
the  parties,  interest  shall  be  allowed  at  the  late  of  six  per  cent 
per  annum  from  and  after  the  time  when  such  accounts  were 
due  and  payable." — S.'s  Civ.  St.,  §  2977,  as  amended  by  Acts 
of  1891,  ch.  68. 

"The  parties  to  any  written  contract  may  agree  to  and  stip- 
ulate for  any  rate  of  interest  not  exceeding  twelve  per  cent,  per 
annum  on  the  amount  or  value  of  the  contract." — S.'s  Civ.  St., 
§  2978. 

"All  written  contracts  whatsoever  which  may  in  any  way, 
directly  or  indirectly,  violate  the  preceding  article  by  stipulating 
for  a  greater  rate  of  interest  than  twelve  per  cent,  per  annum 
shall  be  void  and  of  no  effect  for  the  whole  rate  of  interest  only  ; 
but  the  principal  sum  of  money  or  the  value  of  the  contract 
maybe  received  and  recovered." — S.'s  Civ.  St.,  §  2979. 

"All  judgments  hei'eafter  obtained  in  the  several  courts  of 
this  state,  shall  bear  interest  at  the  rate  of  six  per  cent  per 
annum  from  and  after  the  date  of  the  judgment,  except  when 
the  contract  upon  which  the  judgment  was  founded  bears  a 
specified  interest  greater  than  six  per  cent  per  annum,  and  not 
exceeding  the  highest  rate  of  conventional  interest  permitted 
by  law,  in  which  case,  the  judgment  shall  bear  the  same  rate 
of  interest  specified  in  such  contract  and  after  the  date  of  such 
judgment."— aS.'s  Civ.  St.,  §  2980,  as  amended  by  Acts  of 
1891, ch.  68. 

"No  evidence  of  usurious  interest  shall  be  received  on  the 
trial  of  any  case  unless  the  same  shall  be  specially  pleaded  and 
verified  by  the  affidavit  of  the  party  wishing  to  avail  himself  of 
such  defence."-- aS.'s  Civ.  St.,  §  2981. 

"If  any  person  shall  for  himself  or  as  the  agent  of  another, 
either  directly  or  indirectly,  loan  any  money,  and  directly  or 


400  THE   LAW    OF   INTEREST. 

indirectly  charge  or  receive  a  greater  rate  of  interest  thereon, 
than  twelve  per  cent  per  annnm,  he  shall  be  deemed  guilty  of 
usurj',  and  upon  conviction  thereof,  shall  be  fined  in  any  sum 
not  less  than  one-third  nor  more  than  the  whole  amount  of  the 
money  so  loaned." — Acts  of  1801,  ch.  18. 

UTAH. 

'^Hereafter  it  shall  be  lawful  to  take  eight  per  cent  interest 
per  annum,  when  the  amount  of  interest  has  not  been  specilied 
or  agreed  upon.  Rut  parties  may  agree  in  writing  for  the  pay- 
ment of  any  rate  of  interest  wliatever  on  money  due,  or  to  be- 
come due  on  any  contract.  Any  judgment  rendered  on  sucli 
contract  shall  conform  thereto,  and  shall  bear  the  interest  agreed 
upon  by  the  parties  and  which  shall  be  specified  in  the  judg- 
ment."—^c«so/ 1890,  ch.  23.1 

VERMONT. 

"The  rate  of  interest,  on  the  sum  allowed  for  the  foiboarance 
or  use  of  money,  shall  be  six  dollars  for  one  hundred  dollars  for 
one  year,  at  the  same  rate  for  a  greater  or  less  sum,  and  for  a 
longer  or  shorter  time;  and  no  higher  rate  shall  be  allowed, 
except  in  cases  specially  provided  for  by  law." — liev.  Laws,  ch. 
101,  §  1996. 

"On  notes,  bills,  or  other  similar  obligations,  payable  on  de- 
mand or  at  a  specified  time,  with  interest,  wiien  payments  are 
made,  such  payments  shall  be  applied  :  first,  to  liquidate  the 
interest  accrued  at  the  time  of  such  payments  ;  and  secondly  to 
extinjiuish  the  principal." — Jlev.  Laics,  ch.  101,  §  1997. 

"Wlicusucli  obligations  are  payable  on  demand  or  at  a  spec- 
ified time,  with  interest  aimually,  the  annual  interests  that  re- 
main unpaid  shall  bear  sim[)le  interest  from  the  time  they  become 
due  to  the  time  of  final  settlement ;  but  if  in  any  year,  reckoning 
from  the  time  such  annual  interest  began  lo  accrue,  payments 
are  made,  the  amount  of  such  i)ayments  at  the  end  of  each  year, 
with  interest  thereon  from  the  time  of  i)ayment,  shall  be  ai)plied  : 
fiist,  to  liquidate  the  simple  interest  accrued  from  the  unpaid 
aniuial  interests;  secondly,  to  liquidate  the  annual  interests 
due;  and  thirdly,  to  extinguish  the  principal." — Rev.  Laws,ch. 
101,  §  1998. 

"Tiie  two  preceding  sections  shall  not  affect  notes  and  con- 
tracts existing  prior  to  November  19,  186G." — liev.  Lcnvs,  ch. 
101,  §  1999. 

'  This  takes  tlie  place  of  §  2119  of  the  Compilod  Laws  of  the  terri- 
tory, which  permitted  ten  per  cent.. 


INTEREST   STATUTES.  401 

"When  a  greater  rate  of  interest  tlian  is  allowed  by  law  is 
paid,  tlie  person  paying  the  same  may  recover  back  the  amount 
so  paid  above  tlie  legal  interest,  with  interest  tliereon  from  the 
time  of  payment,  in  an  action  of  assumpsit,  declaring  for  money 
had  and  received  or  goods  sold  and  delivered,  as  the  case  may 
be."— ^ey.  Latos,  ch.  101,  §  2000. 

"•The  foregoing  provisions  relating  to  interest  shall  not  ex- 
tend to  the  letting  of  cattle  or  other  usages  of  a  like  nature 
among  farmers,  or  maritime  contracts,  bottoimy,  or  course  of  ex- 
change, as  has  been  customary." — liev.  Lmvs^ch.  101,  §  2001. 

'•Such'  banking  associations  shall  not  receive  or  demand 
greater  interest  or  discount  on  a  note,  draft,  or  security,  than 
six  per  cent,  per  annum  ;  but  such  interest  or  discount  may  be 
calculated  and  taken  according  to  the  established  rules  of  bank- 
ing."— Rev.  Lcnus,  ch.  160,  §  3520. 

"Savings  banks  incorporated  under  the  laws  of  this  state  may 
demand  and  receive  interest  on  their  loans  at  the  rate  of  six  per 
cent,  per  annum,  payable  semi-annually." — Rev.  Laws.,  ch.  160, 
§  3590. 

VIRGINIA. 

"If  any  balance,  whether  of  profits  received  or  estimated,  or 
of  interest  or  principal,  be  due  by  any  guardian,  or  other  per- 
son acting  as  guardian,  at  the  end  of  any  year,  which  ought 
to  be  invested  or  loaned  out  within  a  reasonable  time  for  the 
benefit  of  the  ward,  and  the  same  remain  in  the  hands  of  such 
guardian  or  other  person,  he  shall  l)e  charged  with  interest  there- 
on from  the  end  of  the  3'ear  in  which  such  balance  arose,  and  so 
on  toties  quoties  during  the  continuance  of  the  trust." — Code, 
§  2606. 

"An}' person  acting  as  guardian  shall  have  the  right  to  de- 
mand and  recover  of  all  obligors  in  bonds,  i)ayable  to  him  as 
guardian,  and  held  by  him  for  the  benefit  of  his  ward,  not  only 
the  principal  sum  due,  with  interest  thereon  after  the  rate  pre- 
scribed by  law,  but  also,  when  the  interest  on  the  principal  sum 
is  not  paid  punctually  at  the  end  of  each  3'ear,  to  demand  and 
recover  interest  upon  the  interest  so  due  and  unpaid,  which  has 
accrueil  dining  the  continuance  of  the  trust." — Code,  §  2607. 

"Whenever  a  guardian  shall  collect  any  principal  or  intei'est 
belonging  to  his  ward,  he  shall  have  thirty  days  to  invest  or  loan 
the  same,  and  shall  not  be  charged  with  interest  thereon  until 
the  expiration  of  said  time,  unless  he  shall  have  made  the  in- 

^ Banks  of  circulation,  discount  and  deposit  organized  uuder  chapter 
160  of  the  Revised  Laws. 
26 


402  THE    LAW    OF    INTEREST. 

vestment  previous  thereto:  in  whicli  case,  lie  shall  be  cliar2[e(l 
witli  interest  from  the  time  the  investment  or  loan  is  made." — 
Code,  §  2608. 

''Legal  interest  sliall  continue  to  be  at  tlie  rate  of  six  doihxrs 
upon  one  hniulred  dollars  for  a  year,  and  proportionately  (or  a 
greater  or  less  sum,  or  for  a  longer  or  shorter  time;  and  no 
person  upon  any  contract  shall  take  for  the  loan  or  forbearance 
of  money  or  other  thing  above  the  value  of  such  rate." — Code, 
§2817." 

"All  contracts  and  assurances  made,  directly  or  indirectly, 
for  the  loan  or  forbearance  of  money  or  other  thing,  at  a  greater 
rate  of  interest  than  is  allowed  by  the  |)receding  section,  shall 
be  deemed  to  be  for  an  illegal  considei-atioii  as  to  the  excess 
beyond  the  i)rincipal  amount  so  loaned  or  forl)orne." — Codo^  § 
2818. 

"A  bank  may  take  interest  on  its  loans  or  discounts  at  the 
rate  of  one  half  of  oneper  ce?if.  for  thirty  days,  and  the  interest 
ma}'  be  received  in  advance." — Code,  §  2819. 

"Any  licensed  banker  or  broker,  and  any  corporation  licensed 
by  law  to  make  loans  or  to  purchase  or  discount  bonds,  bills, 
notes,  or  other  pa[)er,  may  loan  money,  or  discount  bonds, 
bills,  notes,  or  other  pa[)er,  at  a  rate  of  interest  not  exceeding 
one-half  of  one  i>er  cent,  for  thirty  days,  and  may  receive  such 
interest  in  advance." — Code,  §  2820. 

"Any  defendant  may  plead  in  general  terms  that  the  contract 
or  assurance  on  which  tiie  action  is  brought  was  for  the  payment 
of  interest  at  a  greater  rate  than  is  allowed  by  law,  to  which  [)lea 
the  plaintilf  shall  repl}'  generally,  but  may  give  in  evidence, 
upon  the  issue  made  up  thereon,  any  matter  which  couhl  be 
given  in  evidence  under  a  special  replication.  Under  the  plea 
aforesaid,  the  defendant  may  give  in  evidence  any  fact  showing 
or  tending  to  show  that  the  contract  or  assurance,  or  other  writ- 
ing upon  which  the  action  was  brought,  was  for  an  usurious  con- 
sideration ;  and  when  no  such  i)lea  is  made,  if  the  contract  or 
assurance  be  in  writing,  and  usurious  interest  be  provided  for 
therein,  judgment  shall  be  renderetl  for  the  princi[)al  sum  only." 
—Code,  %  2821. 

"Any  borrower  of  money  or  other  thing  may  exhibit  a  bill  in 
equity  against  the  lender  and  compel  him  to  discover,  ui)on  oath, 
the  money  or  thing  really  lent,  and  all  bargains,  contracts,  or 
other  shifts  relative  to  such  loan  and  the  interest  or  consideration 
of  the  same  ;  and  if  it  appear  that  more  than  lawful  interest  was 
reserved,  the  lender  shall  recover  only  his  principal  money  f>r 
other  thing,  without  interest,  and  pay  the  costs  of  suit.  If  prop- 
erty has  been  conveyed  to  secure  tlie  payment  of  the  debt,  and 


INTEREST   STATUTES.  403 

a  sale  thereof  is  about  to  be  made,  or  is  apprehended,  an  injunc- 
tion may  be  awarded  to  prevent  such  sale  pending  the  suit." — 
Code,  §  2822. 

"If  an  excess  beyond  the  lawful  interest  be  paid  in  any  case, 
the  pei'son  paying  the  same  may,  in  a  suit  brought  within  one 
year  thereafter,  recover  it  from  the  person  with  whom  the  con- 
tract was  made  or  to  whom  the  assurance  was  given  ;  and  it  may 
be  so  recovered  from  such  person,  notwithstanding  the  payment 
of  the  excess  be  made  to  his  endorsee  or  assignee." — Code,  § 
2823. 

"Any  judgment  creditor,  who  apprehends  that  he  is  in  danger 
of  loss,  by  reason  of  usurious  dealings  on  the  part  of  his  debtor, 
may  exhibit  his  bill  in  equity,  verified  by  affidavit,  against  the 
party  with  whom  the  dealings  were  had,  and  compel  him  to  dis- 
cover, on  oath,  all  bargains,  contracts,  or  shifts  relative  to  such 
dealings  ;  and  if  it  appear  that  more  than  legal  interest  has  been 
received,  the  excess  above  that  rate,  or  so  much  thereof  as  may 
be  necessary,  shall  be  applied  to  the  satisfaction  of  the  plain- 
tiff's demand.  Such  bill  shall  be  filed  within  five  years  after  the 
receipt  of  the  illegal  interest." — Code,  §  2824. 

"No  corporation  shall,  by  way  of  defence  or  otherwise,  avail 
itself  of  the  provisions  of  the  p-receding  sections  of  this  chapter, 
to  avoid  or  defeat  the  payment  of  any  interest  which  it  has  con- 
tracted to  pay  ;  nor  shall  anything  contained  in  any  of  said  sec- 
tions be  construed  to  prevent  the  recovery  of  such  interest,  though 
it  be  more  than  legal  interest,  and  though  that  fact  appear  on 
the  face  of  the  contract."— Code,  §  2825. 

"Nothing  in  the  act  of  incorporation  of  any  insurance,  bank- 
ing, or  other  corporation,  shall  be  construed  as  giving  authority 
(unless  expressly  given) ,  to  charge,  take,  or  receive,  for  the  loan 
or  forbearance  of  money  or  other  thing,  more  than  the  legal  rate 
of  interest."— Code,  §  2826. 

"The  jury,  in  any  action  founded  on  contract,  may  allow  in- 
terest on  the  principal  due,  or  any  part  thereof,  and  fix  the  pe- 
riod at  which  such  interest  shall  commence.  And  in  any  action 
whether  on  contract  or  for  tort,  the  jury  may  allow  interest  on 
the  sum  fonnd  by  the  verdict,  or  any  part  thereof,  and  fix  the 
period  at  which  the  interest  shall  commence.  Jf  a  verdict  be 
rendered  which  does  not  allow  interest,  the  sum  thereby  found 
shall  bear  interest  from  its  date,  and  judgment  shall  be  entered 
accordingly."— Code,  §  3390. 

"In  an}'^  suit  in  equity,  or  in  an  action  founded  on  contract, 
where  no  jury  is  impaneled,  judgment  or  decree  may  be  rendered 
for  interest  on  the  principal  sum  recovered,  until  such  judgment 
be  paid;  and  where  there  is  a  jury,  which  allows  interest,  the 


404  THE    LAW    OF    INTEREST. 

judgment  shall,  in  like  manner,  be  for  such  interest  until  pay- 
ment.'"—Cuc/e,  §  3391. 

WASHINGTON. 

Certain  damages  are  given  on  bills  of  exchange  instead  of 
interest.— >S7.,  §§  23UG,  2397. 

"The  legal  rate  of  interest  shall  be  ten  per  centum  per  annum." 
— 67.,§  2795. 

"Any  rate  of  interest  agreed  upon  by  parties  to  a  contract, 
specifying  the  same  in  writing,  shall  be  valid  and  leiial." — St., 
§  279(3. 

WEST  VIRGINIA. 

"No  corporation  shall  interpose  the  defence  of  usury  in  any 
suit  or  proceeding  at  law  or  in  chancery  ;  nor  shall  any  bond, 
note,  debt,  or  contract  of  a  corporation  be  set  aside,  impaired, 
or  adjudged  invalid  by  reason  of  anything  contained  in  the  laws 
prohibiting  usury." — Code,  ch.  b'2,  §  22. 

"If  any  balance,  whether  of  profits  received  or  estimated,  or 
of  interest  or  principal,  be  due  by  any  guardian,  or  other  person 
acting  as  guardian,  at  the  end  of  any  year,  which  ought  to  be 
invested  or  loaned  out  within  a  reasonable  time,  for  the  benefit 
of  the  ward,  and  the  same  remain  in  the  hands  of  such  guard- 
ian or  other  person,  he  shall  be  charged  with  interest  tlicreon 
from  the  end  of  the  year  in  which  such  balance  arose,  and  so 
on  toties  quotles  during  the  continuance  of  the  trust." — Code, 
ch.  82,  §  10. 

"Hereafter  any  person  acting  as  guardian  shall  have  the 
right  to  demand  and  recover  of  all  obligors  in  bonds  payable  to 
him  as  guardian,  and  held  by  him  for  the  benefit  of  his  ward, 
not  only  the  principal  sum  due,  with  interest  thereon  after  the 
rate  prescribed  by  law ;  but  also  when  the  interest  on  the  prin- 
cipal sum  is  not  paid  punctually  at  the  end  of  each  year,  to  de- 
mand and  recover  interest  upon  the  interest  so  due  and  unpaid." 
—Code,  ch.  82,§  11. 

"Whenever  a  guardian  sliall  collect  any  principal  or  interest 
belonging  to  his  ward,  he  shall  have  thirty  days  to  investor 
loan  the  same,  and  shall  not  be  charged  with  interest  thereon 
until  the  expiration  of  said  time,  unless  he  shall  have  made  tlie 
investment  previous  thereto,  in  which  case  he  shall  be  charged 
with  interest  from  tlie  time  the  investment  or  loan  was  made." 
—Code,ch.  82,  §  12. 

"Legal  interest  shall  continue  to  be  at  the  rate  of  six  dollars 
upon  one  hundred  dollars  for  a  year,  and  proportiouably  for  a 


INTEREST   STATUTES.  405 

greater  or  less  sum,  or  for  n,  longer  or  shorter  time,  and  no 
person  upon  any  contract,  shall  take  for  the  loan  or  forbearance 
of  money  or  other  thing,  above  the  value  of  such  rate." — Code^ 
ch.  96,  §  4. 

"All  contracts  and  assurances  made  directly  or  indirectly  for 
the  loan  or  forbearance  of  money  or  other  thing  at  a  greater  rate 
of  interest  than  six  per  cent,  except  where  such  greater  rate  is 
now  allowed  by  law,  shall  be  void  as  to  any  excess  of  interest 
agreed  to  be  paid  above  that  rate,  and  no  further." — Code,  ch. 
96,  §5. 

"Any  defendant  may  plead  in  general  terms  that  the  contract 
or  assurance  on  wdiich  the  action  is  brought,  was  for  the  pay- 
ment of  interest  at  a  greater  rate  tluin  is  allowed  by  law,  to 
which  plea  the  plaintiff  shall  reply  generally,  but  may  give  in 
evidence  upon  the  issue  made  up  thereon,  any  matter  which 
could  be  given  in  evidence  under  a  special  replication ;  under 
the  plea  aforesaid,  the  defendant  may  give  in  evidence  any  fact 
showing,  or  tending  to  show,  that  the  contract,  or  assurance, 
or  other  writing  upon  which  the  action  was  brought,  was  for 
an  usurious  consideration.'  And  upon  such  plea  the  court  shall 
direct  a  special  issue  to  try  and  ascertain  : 

"I.  Whether  or  not,  the  contract,  assurance  or  other  writ- 
ing is  usurious. 

"II.     If  usurious,  to  what  extent. 

"III.  Whether  or  not  interest  has  been  paid  on  said  con- 
ti'act,  assurance  or  other  writing,  above  six  per  cent.,  and  if  so, 
to  what  extent.  And  if  a  verdict  be  found  upon  the  plea  of 
usury,  for  the  defendant,  a  judgment  shall  be  rendered  for  the 
jDlaintiff  for  the  principal  sum  due,  with  interest  at  tlie  rate  of 
six  per  centum  per  annum,  and  if  any  interest  has  been  paiil 
above  the  rate  of  six  per  centum  per  annum,  the  excess  over 
and  above  that  rate  shall  be  entered  as  a  credit  on  the  sum  due, 
and  if  nothing  be  found  due  after  applying  all  credits  and  all 
excesses  of  interest  paid  above  six  per  cent.,  judgment  shall  be 
entered  for  the  defendant." — Code,  ch.  96,  §  6. 

"An}'  borrower  of  money,  or  other  thing  may  exhibit  a  bill 
in  equity  against  the  lender,  and  compel  him  to  discover  upon 
oath  the  money  or  thing  really  lent,  and  all  bargains,  contracts, 
or  shifts  relative  to  such  loan,  and  the  interest  or  consideration 
of  the  same ;  and  if  it  appear  that  more  than  lawful  interest 
was  reserved,  the  lender  shall  recover  his  principal  money  or 
other  thing  with  six  per  cent,  interest  only,  but  shall  recover 
no  costs.  If  property  has  been  conveyed  to  secure  the  pay- 
ment of  the  debt,  and  a  sale  thereof  is  about  to  be  made,  or  is 
api)rehended,  an  injunction  may  be  awarded  to  prevent  such 
sale  pending  the  suit." — Code,  ch.  96,  §  7. 


406  THE    LA-W    OF    INTEREST. 

''The  jnrv  in  anj'  action  founded  on  contract,  may  allow 
interest  on  the  principal  due,  or  any  part  thereof,  and  in  all 
cases  they  sliall  lind  the  aggregate  of  principal  and  interest  due 
at  the  time  of  the  trial,  after  allowing  all  credits,  payments  and 
set-offs,  and  judgment  shall  be  entered  for  such  aggregate  with 
interest  from  the  date  of  the  verdict." — Code,  ch.  131,  §  14. 

'•When  there  is  a  recovery  on  a  bond  conditioned  for  the 
payment  of  money,  as  well  as  in  all  cases  where  a  judgment  or 
decree  is  rendered  or  made  for  the  payment  of  money,  it  shall 
be  for  tho  aggregate  of  principal  and  interest  due  at  the  date 
of  the  verdict  if  there  be  one,  otherwise  at  the  date  of  the  judg- 
ment or  decree,  with  interest  thereon  from  such  date,  except  in 
cases  where  it  is  otherwise  provided." — Code,  ch.  131,  §  IG. 

"Ever}^  judgment  or  decree  for  tlie  payment  of  mone}',  except 
where  it  is  otherwise  provided  by  law,  shall  bear  interest  from 
the  date  thereof,  whether  it  be  so  stated  in  the  judgment  or 
decree  or  not." — Code,  ch.  131,  §  18. 

"The  interest  on  all  loans  made  to  individuals  under  an  order 
of  court,  shall  become  due  and  payable  on  the  first  day  of 
January  in  each  year,  until  the  principal  is  paid;  and  unless 
the  interest  be  paid  at  the  time  it  becomes  due  and  payable, 
compound  interest  shall  be  charged  thereon  to  the  borrower 
from  s'lich  time  until  payment  thereof  is  made." — Code,  ch.  133, 
§  23. 

WISCONSIN. 

"No  interest  shall  be  allowed  to  the  plaintiff  upon  any  sum 
allowed  by  the  county  board,  and  for  which  orders  were  drawn." 
—St.,  §  085. 

'•The  rate  of  interest  upon  the  loan  or  forbearance  of  any 
money,  goods  or  things  in  action,  shall  be  seven  dollars  upon 
the  one  hundred  dollars,  for  one  year,  and  after  that  rate  for  a 
greater  or  less  sum,  or  for  a  longer  or  shorter  time  ;  but  it  shall 
be  competent  for  parties  to  contract  for  the  payment  and  receipt 
of  a  rate  of  interest  not  exceeding  ten  dollars  on  one  hundred 
dollars,  as  aforesaid  ;  in  wiiich  case,  such  rate  exceeding  seven 
dollars  on  one  hundred  dollars  shall  be  clearly  expressed  in 
writiug."— ;5^f.,  §  1688. 

'•No  person,  company  or  corporation  shall,  directly  or  indi- 
rectly, take  or  receive  in  money,  goods,  or  things  in  action,  or 
in  any  other  wa}',  any  greater  sum,  or  any  greater  value,  for 
the  loan  or  forbearance  of  money,  goods,  or  things  in  action, 
than  at  the  rate  of  ten  dollars  upon  one  hundred  dollars  for 
one  year ;  and  in  the  computation  of  interest  upon  any  l)ond, 
note,  or  other  instrument  or  agreement,  interest  shall  not  be 
com  pounded,  uor  shall  the  interest  thereon  be  construed  to  bear 


INTEREST    STATUTES.  407 

interest,  unless  an  agreement  to  that  effect  is  clearly  expressed 
in  writing,  and  signed  by  the  party  to  be  charged  therewith." 
—St.,  §  1689. 

"All  bonds,  bills,  notes,  assurances,  conveyances,  and  all 
other  contracts  or  securities  whatever,  whereby  there  is  reserved 
or  secured  a  rate  of  interest  exceeding  ten  dollars  on  one  hun- 
dred dollars  for  one  year,  shall  be  valid  and  effectual  to  secure 
the  repayment  of  the  principal  sura  loaned;  but  no  interest 
shall  be  recovered  on  such  securities,  or  on  any  money  or  other 
thing  loaned  by  such  contract,  except  upon  bottomry  and 
respondentia  bonds  and  contracts ;  and  no  corporation  shall 
interpose  the  defence  of  usury." — St.,  §  1690. 

"Every  person  who,  for  any  such  loan  or  forbearance,  shall 
have  paid  or  delivered  any  greater  sum  or  value  than  is  above 
allowed  to  be  received,  may,  by  himself  or  his  personal  repre- 
sentative, recover  in  an  action  against  the  person  who  shall  liave 
taken  or  received  the  same,  or  his  personal  representative, 
treble  the  amount  of  the  money  so  paid  or  value  delivered,  above 
the  rate  aforesaid,  if  such  action  shall  be  brought  within  one 
year,  after  such  payment  or  delivery." — St.,  §  1091. 

"Whenever  any  person  shall  apply  to  any  court  in  this  state 
to  be  relieved  in  case  of  a  usurious  contract  or  security,  or 
when  any  person  shall  set  up  the  plea  of  usury  in  any  action 
instituted  against  him,  such  person  to  be  entitled  to  such  relief 
or  the  benefit  of  such  plea,  shall  prove  a  tender  of  the  principal 
sum  of  money  or  thing  loaned  to  the  party  entitled  to  receive 
the  same."— -^^.,  §  1692. 

No  turnpike  or  other  "such  corporation  shall  be  allowed  to 
make  the  defense  of  usury  against  the  holder  of  any  indebted- 
ness so  secured." — *S'^.,  §  1864. 

"No  premiums,  fines  or  interest  on  such  premiums^  that  may 
accrue  to  any  such  corporation  under  the  provisions  of  this 
chapter  shall  be  deemed  usurious." — St.,  §  2013. 

"When  the  judgment  is  for  the  recovery  of  money,  interest 
from  the  time  of  verdict  or  report  until  judgment  is  finally  en- 
tered shall  be  computed  by  the  clerk  and  added  to  the  costs  of 
the  party  entitled  thereto."— ^i.,  §  2922. 

"It  shall  be  lawful  to  direct  in  every  execution  upon  a  judg- 
ment for  the  recovery  of  money,  in  whole  or  in  part,  the  col- 
lection of  interest  on  the  amount  recovered,  from  the  date  of 
the  rendition  thereof  until  such  amount  be  paid." — St.,  §  2969. 

"The  amount  adjudged  to  be  due  in  the  judgment  shall  draw 
interest  at  the  rate  provided  to  be  paid  on  the  mortgage  debt, 

'  Of  mutual  loan  and  building  corporations. 


-lOS  THE    LAW    OF    INTEREST. 

but  sIkiU  uot  exceed  the  minimum  legal  rate  of  interest  from  its 
(late  until  the  date  of  sale  or  payment,  and  all  insttdlments  Avhich 
shall  become  due  after  the  dale  of  such  judgment,  shall  draw 
interest  at  the  same  rate  from  the  time  the  same  shall  bi'conie 
due." — 67.,  §  31G1:,  as  amended  by  Acts  of  1887,  ch.  18G,  and 
Acts  of  18dl,  ch.  303,  §  1. 


WYOMING. 

"An}'  rate  of  interest  which  may  be  agreed  upon  between  par- 
ties, for  the  loan  or  forbearance  of  money,  goods  or  things  in  ac- 
tion, shall  be  valid  ;  Provided,  that  if  such  agreement  be  for  a 
higher  rate  of  interest  than  twelve  per  cent,  per  annum,  the  same 
shall  be  in  writmg."— 7?.  S.,  §  1310. 

^'In  the  absence  of  any  contract  between  the  parties,  the  rate 
of  interest  upon  loan  or  forbearance  of  money,  goods,  or  things 
in  action,  shall  be  at  the  rate  of  twelve  per  cent,  per  annum." — 

U.S.,  §  1311. 

"Interest  on  all  judgments  or  decrees  for  monc}',  shall  be  at 
the  rate  of  twelve  per  cent,  per  annum  from  the  date  of  the  ren- 
dition and  signing  thereof  until  satisfied." — R.  S.,  §  1312. 

"On  money  due  on  an  instrument  in  writing,  or  on  settlement 
of  account  from  the  day  the  balance  shall  be  agreed  on,  money 
received  to  the  use  of  another,  and  retained  witiiout  the  owner's 
consent,  express  or  implied,  from  the  receipt  thereof,  and  on 
money  loaned  or  due  and  withheld  by  unreasonable  delay  of 
payment,  interest  shall  be  allowed  at  the  rate  of  twelve  per  cent. 
per  annum.  Unsettled  accounts  between  parties  shall  bear  in- 
terest after  thirty  days  from  the  date  of  the  last  item  thereof." 
—R.S.,^13Vd. 

"When  in  any  instrument  in  writing,  specifying  the  rate  of 
interest,  no  period  of  time  is  mentioned  for  which  such  is  to  be 
calculated,  it  shall  be  deemed  by  the  year." — R.  S.,  §  1314. 
"All  territorial  [state],  county,  school  district,  town,  city  or 
other  warrants  issued  after  February  eighth,  eighteen  hundred 
and  eighty-two,  for  any  salary  or  salaries,  fee  or  fees,  or  for  or 
on  account  of  any  indebtedness,  claimor  demand  whatever,  which 
indebtedness,  claim  or  demand  shall  have  accrued  on  any  con- 
tract, transition  or  liability  entered  into  or  aiising  after  February 
eighth,  eighteen  hundred  and  eighty-two,  sliall  draw  interest  upon 
the  amount  expressed  in  such  warrant  or  warrants  at  the  rate  of 
eight  per  centum  per  annum  from  the  date  of  the  presentation 
thereof  for  payment  at  the  treasury  or  other  place  wlicrethe 
same  may  be  payable,  until  tliere  is  money  in  the  treasury  for 
the  payment  thereof,  and  it  shall  be  unlawful  to  allow  or  pay 


INTEREST    STATUTES.  409 

any  rate  of  interest  upon  such  warrant  or  warrants,  except  as 
herein  specified  and  expressed,  and  every  territorial  [state]  or 
county  treasurer  to  whom  such  order  or  warrant  is  presented  for 
payment,  provided  he  has  not  sufficient  funds  in  the  treasury  to 
pay  the  same,  shall  indorse  thereon  the  words  'not  paid  for  Avant 
of  funds,'  and  sign  and  date  the  same  officially." — R.  S.,  § 
1315. 

"The  legal  rates  of  interest  in  all  debts,  dues  and  demands 
not  above  specified,  shall  be  at  the  rate  of  twelve  per  cent,  per 
annum,  in  the  absence  of  any  contract  by  the  parties  to  the  con- 
trary."—i2.  >S.,  §  1316. 

''On  the  thirtieth  day  of  November  in  each  year,  the  unpaid 
taxes  of  that  year  become  delinquent,  and  shall  draw  interest 
at  the  rate  of  twenty-five  per  centum  per  annum  until  paid,  or 
collected  by  distress  and  sale,  and  taxes  upon  real  property  are 
hereby  made  a  perpetual  lieu  thereupon,  against  all  persons  or 
corporations  except  the  United  States  and  this  territory  [state], 
and  taxes  due  from  any  person  or  personal  property,  shall  be  a 
lien  on  any  real  property  owned  by  such  person." — E.  S.,  § 
3819. 

Land  sold  for  taxes  may  be  redeenaed  by  paying  "the  amount 
for  which  the  same  was  sold,  and  thirty  per  cent,  on  the  sum, 
with  twelve  per  cent,  interest  per  annum  on  the  whole  amount, 
from  the  day  of  sale,  and  the  amount  of  all  taxes  accruing  aftei- 
such  sale,  with  twelve  per  cent,  interest  per  annum  on  such  subse- 
quent taxes,"  if  paid  by  the  then  holder.— i2.  S.,  §  3829. 

"Delinquencies  on  the  part  of  any  county  in  payment  of  the 
territorial  [state]  tax  levy  shall  bear  interest  at  the  rate  of  eight 
per  centum  per  annum,  after  the  fifteenth  day  of  January  Avlien 
such  tax  levy  was  payable  to  the  territorial  [state]  treasurer." 
— JS.  /5.,  §  3837. 


i:n"dex. 


Accommodation  paper,  ..... 

Indorsers  of  usurious  couti-acts, 

May  plead  usury,     ...... 

Makers  of  usurious  coutracts  may  plead  usury, 
Accounts, 

Admiuistrators',       ...... 

Agents',      ........ 

Attorneys',      ....... 

Executors',  ....... 

Guardians',     ........ 

Partners',  ........ 

Running,         ........ 

Stated,        ........ 

Trustees',         ....... 

See  Compound  interest,  Interest  allowed  as  damages, 
Partial  payments,  Rests. 
Accrued  interest,         ..... 
Adjiinistrators,  ..... 

Accounts,  .         . 

Advances,       ....... 

Collection  of  assets,  .... 

Compound  interest,  ..... 

Payment  of  debts,      ..... 

Estates  of  deceased  administrators. 

Distributive  shares,     ..... 

Investment  of  assets,      .         .         .         .         , 

Mingling  funds,  ..... 

Misapplication  of  funds,  ... 

Private  use  of  funds,  .... 

(411) 


.     292 
243 

.     268 
268 

38 
.       43 

43 
.       52 

62-64 

71 

79,  84 

.       85 

78 


16 
33 

38 
39 
34 
37,  38 
34 
40 
38 
35 
37 
37 
37 


412  INDEX. 


Pase 


ADjriNisTRATOKS,  cojitinucd, 

rrofits, .         .  37 

May  plead  usury,  .......     272 

Rests, •       .  38 

Advance  intei:i:st,         ......  13,  14: 

Effect  of  paying  interest  in  advauce,         .  .  .     13,14 

On  maturity  of  principal,         .  .         .  .  .13 

Sureties, 13,  14 

Not  usui'ious,      ........     224 

Advancements  by  takents  to  children,     ...  86 

Advances, 

By  administrators,  ......  39 

Agents, 44 

Assignees  of  bankrupts  and  insolvents,         .  .  45 

Attorneys,       ........       44 

Executors,  .......  55 

Guardians,       ........       64 

Partners,      ........  70 

Trustees,  ........       78 

Rate, 44 

See  Compound  interest,  Uests. 
Agents, 

Accounts,  ........       43 

Liens,     .........  44 

Mixing  funds,     ........       42 

Trofits,  42 

Special  damages,  .......       42 

Authority  and  liability  in  usury,.     .  .  .  237,  239 

Alimony,        .........       87 

Allowance  of  interest  in  settlement,      ...  32 

Alteration,  .  .  .         .         .         .         .  ,14 

Annuities,  ........  87 

Ante-date  interest  not  usurious,  .         .         .         .223 

Ante-dated  notes  not  usurious,  ....         223 

Apportionment  of  interest,  .         .         .         .         .16 

Assignees  of  bankrupts  and  insolvents,              .         .  44 

Advances, .       45 


INDEX. 


413 


Assignees  of  bankrupts  and  insolvents, 
Investments,  .... 

Mixing  funds  with  their  own. 
May  plead  usury. 
Attorneys,      ...... 

Advances,        .     ■    . 
Liability  for  sub-attorney, 
Awards  on  usurious  contracts, 
Banks,  ...... 

Liability  for  interest  on  deposits,     . 
In  usury,  ..... 

Barring  interest,      .         .         ... 

Interest  allowed  as  damages, 
Change  of  legal  rate. 
Court's  order,  .... 

Creditor,  Act  of,  ... 

Detith, 

Garnishee  process. 
Interpleader,  .... 

Judgment,  .... 

Negligence,     ..... 
Payment  of  principal. 
Statute  of  limitations,     . 
Tender,         ..... 
Trustee  process,         .         .         .         . 
Waiver,         .         . 

War, 

Betterments,         ..... 

Bills  and  notes,       .... 

Demand,     ...... 

Payment  of  interest  by, 

Instalment  notes,         .... 

Bona  fide  holder  of  paper  in  usury, 

Bonds,  

Appeal,            ..... 
Bail, 


ontinued, 


Page 


.  44 

,45 

. 

45 

. 

2G4 

40,  43 

,  44 

44 

. 

42 

, 

233 

. 

46 

. 

98 

. 

242 

24, 

137 

. 

24 

. 

139 

. 

139 

. 

138 

24 

24, 

139 

.   24, 

139 

. 

140 

. 

140 

. 

140 

. 

142 

122, 

142 

.   24, 

139 

. 

144 

. 

145 

. 

88 

, 

88 

. 

88 

. 

17 

. 

89 

. 

288 

, 

89 

. 

90 

e         . 

90 

414 


INDEX. 


BoxDS,  continued^ 


Page 


Replevin, 

90 

Back  interest,      ....... 

.       90 

From  what  time  interest  is  allowed, 

91 

Bottom  KY,      ........ 

.       92 

Burden  of  proof  in  usuky,          .... 

282 

Cancellation  of  usurious  contract  in  equity, 

.     252 

Clerk  of  court,  Province   of, 

181 

Collection  of  interest   on  judgments, 

.     109 

Collectors,  Tax,       .         .         .         .         . 

G6 

Compound  interest,       ...... 

.     157 

Contracts  for  compound  interest. 

158 

Not  usurious,            ...... 

.     221 

When  allowed  as  damages,       .... 

159 

If  paid  it  cannot  be  recovered,     .         .         .         . 

.     1G4 

Compound  interest  tables,          .... 

164 

Compounded  semi-annually,     .          .          .          . 

.     1G5 

Compounded  annually,          .... 

1G6 

Accounts, 

Running,      ....... 

84 

Stated,             

.       85 

Administrators,       ...... 

87 

Accounts, 

.       38 

Rests, 

38 

Damages,            ....... 

.       97 

Rests, 

97 

Solvent  estates,           ...... 

.       47 

Executors,       ....... 

50 

Advances,       ....... 

.       56 

Rests, 

56 

Garnishees,         ....... 

.       58 

Guardians,     ....... 

01,  63,  64 

Judgments,          ....... 

.     107 

Legacies,          ....... 

121 

Trustees,    ........ 

.       77 

Trustee  process,       

58 

Conditional  interest  in  usury,      »         .         .         , 

.     222 

INDEX. 


415 


Conflict  of  laws,  .         .         .         » 

Place,     ...... 

Generally,  ..... 

Legacies,  ..... 

Usury,  ...... 

Practice,  ..... 

Usury,      ...... 

Time,  ...... 

Contractual  interest. 
Interest  allowed  as  damages, 
Consideration, 

Of  express  contracts  for  interest,     . 
Legal  consideration  of  usurious  contracts, 
Usurious  interest  as  a  consideration, 
Constables,  ..... 

Construction, 

Of  contracts  for  interest. 

Generally,  ..... 

In  usury,  .... 

Of  interest  statutes. 
Contingent  interest,     . 
Contracts  for  interest, 

How  made,  .... 

Expressly,  .         .         .         , 

Consideration, 

See  Consideration. 
In  what  payable. 
Rate,         .... 

When  it  begins  to  run, 
When  it  ceases  to  run. 
When  payable. 
Contingent  interest. 
Variance, 

Interest  after  maturity. 
Effect  on  maturity. 
Effect  on  negotiability,     . 


Page 

20,  187 

.     187 

187 

121, 190 

190,  193 

.     190 

193 

.     193 

20,  193 

193 

7 

.     235 

236 

.       GS 


20 

202 

306 

12 

5,  6 

6 

6 

7 

7 

7 

8 

8 

9,  10 

.       12 

11 

13,  14 

13,  14 

.       14 


41G 


INDEX. 


Contracts  fou  interest,  continued, 
I  low  niaile,  continued, 
Exi)rcssly,  contimied. 

Simple  interest,         .... 

Compound  interest, 
See  Usnry. 
Impliedly,  .... 

Acceptance  of  accounts, 
Admis:sion,  .... 

General  usage,  .... 

Previous  dealings. 
Construction, 

Generally,       ..... 

In  usur}^      ...... 

Contractual  Interest, 
Costs, 

To  whom  awarded  in  usury, 
Interest  on,     . 
Court,  Province  of,      . 
Damages,  ...••• 

Interest  as  part  of  damages. 
Compound  interest,  .... 

Costs,  ...... 

Rests,      ....... 

Damages,  Interest  allowed  as. 

Generally,  .         .         .         .         • 

Amount  due  must  be  certain, 
Time  of  payment  must  be  certain, 
From  time  debt  is  due. 
No  time  fixed,      .... 

On  demand,      ..... 

Credit,  ..... 

Amount  due  and  time  of  payment  must 

debtor, 

In  discretion  of  jury,  When, 

In  discretion  of  court  in  Louisiana, 

Allowed  by  i)arties  in  settlement  of  account? 


Page 


,      , 

17 

.  158 

.   20 

,      . 

21 

21 

21 

.   20 

.   20 

, 

202 

5 

.  283 

97 

.  176 

, 

92 

.   9G 

, 

97 

.   97 

. 

97 

9,  22 

.   25 

. 

25 

25,  27 

, 

27 

.   29 

30 

.   30 

be  known 

to 

. 

25,  32 

.  24,  79 

,  84,  85 

, 

27,  79 

ts  binding. 

32 

INDEX. 


417 


Page 


Damages,  Interest  allowed  as,  continued, 

Not  allowed  if  included  in  principal, 

.       33 

Demand  for  principal  includes  the  interest, 

33 

When  payable,              

9 

Not  allowable  before  debt  is  due. 

.       23 

Can  orally  agree  that  none  be  allowed, 

24 

"When  barred.      See  Barring  interest. 

Running  accounts,             ..... 

79 

Accounts  stated, 

.       85 

Administrators,        ...... 

33 

Advancements,             

.      86 

Agents,            ....... 

.     40,  43 

Alimony, 

.       87 

Annuities, . 

87 

Assignees  of  bankrui)ts  and  insolvents, 

.       44 

Attorneys,       ....... 

40 

Banks, 

46,  98 

Betterments, 

88 

Bills  and  notes,            ..... 

.       88 

Bonds, 

89 

Bottomry, 

.       92 

Tax  collectors, 

66 

Constables,          ...... 

.       68 

Costs, 

97 

Damages,    ....... 

.       92 

Debts  of  another,    ...... 

97 

Deposits, 

.       97 

Dividends,       ....... 

98 

Dower,  etc., 

.       99 

Solvent  estates, 

46 

Executors,           ...... 

.       47 

Factors,           ....... 

40 

Money  fraudulently  obtained. 

.       99 

Garnishees,      ....... 

56 

Guarantors,         ...... 

.       73 

Guardians, 

60 

418 


INDEX. 


Damacks,  Interest  allowed  as,  continued, 
lucumbrauces,     ..... 
Indorsers,        ..... 
lujuuctious,         ..... 
Insolvency,      ..... 
Interpleaders, 
Judgments,      ... 
Legacies,    .... 
Masters  in  chancery, 
Mechanics' liens, 
IMinors,  .... 
Money  had  and  received,     . 
Money  paid  for  the  use  of  another. 
Municipal  corporations. 
Officers,  .... 

Partitions, 

Partners,  .... 

Penalties,    .... 
Policies,  .... 

Receivers, 
Eecognizances, 

Rent,  .... 

Replevin,  .... 

Royalties,  .... 

Sales, 

Sheriffs,      .... 

Stakeholders, 

Stockholders, 

Subscriptions, 

Sureties,     .... 

Taxes,     .         .          .         .         • 

Treasurers, 

Trover,   ..... 

Trustees,  .... 
Death  bars  interest  allowed  as  damages, 
Debts  of  another, 


Page 

99 

64 

59 
100 

56 
102 
111 

65 
122 

65 

122 

.127 

65 

128 

69 

128 

128 

72 

89 

129 

131 

131 

131 

67 

72 

73 

134 

73 

134 

68 

135 

75 

24 

97 


INDEX. 


419 


Decrees, 
In  usury,  .         .         .         .         „ 

See  Judgments. 
Defences  to  recovery  of  usury  paid, 
Definition, 

Of  interest,     ..... 
Of  usury. 
Demand  and  notice  when  interest 
Demand  contracts, 
Deposits,  .... 
Generally, 
In  banks. 
Descent  of  interest. 
Discovery  in  equity  of  evidence 

tracts, 
Distributive  shares,  etc., 
Administrators, 
Executors, 
Trustees, 
Dividends, 
Dower,  etc.. 
Duration  of  interest, 
When  it  begins. 

In  express  contracts, 
In  interest  allowed  as  damages. 
Judgments, 
When  it  ceases. 

In  express  contracts. 

Realizing  from  sale  of  security 
Judgments, 
In  interest  allowed  as  damages. 
Judgments, 
Equity,  Interest  in, 

Relief  from  interest  as  a  penalty. 
Judgments,  .... 

Estates,  Solvent,     ... 
Estoppel  bars  recovery  of  usury  paid. 


Pasre 


233 


288 


1 

1,  197 

is  due  BY  instalments,     15 

14,30 

97 

97 

98 

16 


IN  usurious  con- 


252 

38 

53 

78 

98 

99 

8,  9 

8 

8 

104 

9,  19 

9 

19 

19 


106 

13,  301 

13 

110 

46 

.     294 


/ 


420 


IXDEX. 


Evidence,  ... 

Foreign  law  and  contracts, 
Rate.     Sec  Practice. 

Conventional, 

Legal,  .         .         .         , 

In  iisuiy, 

Oral, 

Burden  of  proof. 

Quantity, 

Character, 

AVho  may  be  witnesses, 

EXECUTOKS, 

Accounting,     . 

Advances, 

Compound  interest, 

Executors'  own  debts. 

Distributive  shares,  etc., 

Liability  of  executors'  executors, 

Investments,  ..... 

Legacies,  ..... 

Mingling  funds,       .         .         .         . 

Profits, 

Rate, •         ■ 

May  recover  usury  paid,     . 
Factors,  ...... 

Forbearance  to  sue  may  be  usurious, 
Foreign  law  and  contracts, 

Fraud, • 

Frequent  payments  of  interest  not  usurious, 
Garnishee  process,  .... 

Abatement  of  process. 

Payment,         ...... 

Void  process,     ..... 

Barring  interest,      ..... 
Garnishees,  ..... 

Compound  interest,  ... 

Dilatory  proceedings, 


Page 

,     , 

181 

182,  190, 

193 

7 

153 

. 

280 

281 

282 

282 

. 

282 

285 

, 

47 

52 

. 

55 

50 

54 

53 

52 

.  47,49 

54 

.  48,  50 

. 

51 

52 

272 

40 

. 

212 

182,  190, 

193 

99 

, 

221 

24 

. 

59 

59 

. 

59 

24 

, 

50 

. 

58 

,    , 

58 

INDEX. 


421 


Page 

Garnishees,  continued, 

Mingling  funds,       .......  58 

Using  the  funds,  .......       58 

Payment,         ........  59 

Guarantors, 

General  liability''  for  contractual  interest,  .         .  15 

Interest  allowed  as  damages,       .....       73 

On  bonds, 73,  74 

In  usur}',  ........     243 

May  plead  and  recover  usury,       ....         267 

Guardians,  ........       60 

Accounts,        .......  62-64 

Rests, 61,  62 

Advances,       ........  64 

Coaipound  interest,     .....  61,  63,  64 

Conversion,  .......  60 

Investments,       .......         60,  61 

Mingling  funds,       .......  60 

Negligence, 60 

Profits,  62 

Termination  of  guardianship,       .....       63 
History  of  interest,         ......  1 

Of  usury, 197 

Inclusion  in  principal, 19 

Incumbrances, .         .       99 

Indorsers, 

Contractual  interest, 

General  liabilit}", 

Demand  and  notice  when  interest  is  due  by  instalments. 

Interest  allowed  as  damages, 

On  notes,         ........ 

In  usury,  .         .         .         .         .         .      ■   . 

Accommodation  indorsers,  .         .         .         . 

May  plead  and  recover  usur}-,  .... 

Accommodation  indorsers,         .... 

Injunctions,  ........ 

To  restrain  enforcement  of  usurious  contracts. 


15 
15 

15 

64 
64 
242 
243 
267 
268 
59 
252 


422 


INDEX. 


Insolvexct,  .... 

Contractual  interest, 
Interest  allowed  as  damages, 
In  court,      .... 
In  an  assignment, 
Instalment  KOTES, 
Inteupleaders,      .... 
Judgments,         .... 
Appeal,      .         .         .         .         • 
Audita  querela, 
Compound  interest, 
When  interest  begins  to  run, 
"When  interest  ceases  to  run. 
Demand,  .... 

In  equit}-,  .... 

Foreign  judgments, 
Collection  of  interest  on  judgments. 
Lien  for  interest,     . 
Motion  for  new  trial  and  exceptions 

Rate, 104, 

Review,       ..... 

Reviving  judgments. 

Validity,  ..... 

In  usury,  ...... 

Defence  to  claim  of  usury. 
Jurisdiction  of  court,  Effect  of  interest  on. 
Jury,  Province  of, 

Question  of  trustees'  laches  for  jury, 
Allowance  of  interest  in  their  discretion,  "\Yiion,  24, 
In  England,  ...... 

In  the  United  States,       .         .         .     *    . 
Lacues  is  a  defence  to  recovery  of  usury  paid, 

Law  and  fact  in  usury, 

Sec  Practice. 

Legacies, 

General,     .....•• 
SpeciGc, 


Page 

.   16 

IC 

.  100 

100, 106 

.  101 

56,  59 

102,  183 

.  108 

107 
.  107 

104 
.  106 

104 
.  110 

110 
.  109 

107 

.  108 

106,  150 

.  109 

108 
.  104 

233 
.  295 

185 

.  178 

79 

79,84,85 

24 

.   2i 

297 
.  284 

54, 111 

113 

.  113 


INDEX. 


423 


Legacies,  continued, 

Contingent,     ..... 
What  interest  belongs  to  the  residue, 
In  general,      ..... 
Compromise,  .... 

Rate,  ..... 

Compound  interest, 
Law  of  what  place  governs, 
Contest  of  will,        .... 
Legacy  of  a  debt, 
Tender  bars  interest. 
Maintenance,  .... 

General,  ..... 

Express,      ..... 
Posthumous  children. 
Child  already  supported. 

Rate, 

llex  for  interest  in  judgments, 
Maintenance,         ..... 

General,  ..... 

Express,     .    '     . 

Posthumous  children, 

Child  already  supported,     . 

Rate,       ...... 

Masters  in  chancery. 
Maturity  of  principal. 
Effect  of  interest, 

Agreement  for  interest  after  maturit}-. 
Interest  in  advance,  . 

Payable  on  time. 
Payable  on  demand, 
Right  to  sue  may  be  reserved. 
Mechanics'  liens,      .... 

Minors,  ...... 

Mistake,  Recovery  op  interest  paid  by, 
Money  had  and  received, 

Rate, 


Page 


0 

116 

.  116 

120 

.  121 

121 

.  121 

121,  190 

.  122 

122 

.  122 

117 

.  117 

119 

.  119 

119 

.  120 

107 

.  117 

117 

.  119 

119 

.  119 

120 

.   65 

13,  14 

.  13,  14 

.   13 

.  13,  14 

13,  14 

. 

14 

.   14 

122 

•   65 

. 

186 

.  122 

. 

126 

424 


INDEX. 


Page 

Money  paid  for  the  use  of  another, 

.     127 

IVIlNICIPAL  COKPORATIONS,  ETC., 

G5 

Negligence  bars  recovery  of  interest, 

.     110 

Negotiability  not  affected  by  note's 

BEARING    IN- 

teuest  after  maturity, 
Novation, 

11 

19G 

A  defence  to  claim  for  usuiy, 

.     297 

To  effect  au  usurious  contract. 

232 

Officers, 

.       CG 

Partial  payments,      .... 

.     17,  18,  1G7 

Application  of  paj-nients,    . 
Kulos,     .         .     \ 

.     170 

1G8,   169 

Running  accounts,       .... 

.       84 

Parties  in  usury,        .... 
Agents,      ...... 

237 
.     237 

Banks,    ...... 

242 

Guarantors,         ..... 

.     243 

ludorscrs,        ..... 
Partners,    ...... 

242 
.     244 

Sureties,          ..... 

244 

Partitions,    ...... 

.     128 

Partners,           ..... 

69 

Advances, 

.       70 

Accounting,    ..... 

71 

Dissolution, 

.       70 

Withdrawing  funds, 

69 

In  usury,    ...... 

.     244 

May  plead  and  recover  usury, 

269 

Payable,  When  interest  is. 

0,  10 

On  express  contracts, 

9,  10 

At  maturity  of  principal, 
Annually,    ..... 

9 
10 

Interest  as  damages. 

9 

Payment, 

17 

Generally,           .         .         .         .         . 

.       17 

By  note, 

In  partial  payments,   .         .         .         . 

17 
17,  IS 

INDEX.  425 

Page 

Payment,  continued, 

Late  payments,        .......  19 

Defence  to  claim  of  usury,  .         .         .         .         .297 

Penalties, 13,  14,  128 

Interest  as  a  penalty  relieved  in  equity,       .         .  13,  14 

Pleading,      ........     172,  173 

In  usury,  ........         275 

Policies, 128 

Post-due  interest,      .......  20 

Practice, 14,24,79,176,190,275 

Province  of  the  court,      .         .         .         .         .         .         176 

Province  of  the  jury,  .  .         .  .         .         .178 

Province  of  the  clerk,      .         .         .         .         .         .         181 

Conflict  of  laws, 190,  193 

Evidence,         ........         181 

Foreign  law  and  contracts,  .         .         .       182,190,193 

Question  of  trustees'  laches  for  jury,  ...       79 

In  demand  contracts  cannot  show  oral  contract  for  delay,     14 
Can  show  an  oral  agreement  that  no  interest  shall  be 

allowed  as  damages, .24 

In  usury,         ........         275 

Conflict  of  laws, 190,  193 

Proof, 280 

Recovery  of  security,      ......     284 

Law  and  fact,      . 284 

Witnesses, 285 

Present  worth,  .......  15 

Presdjiption  that   reference  to   a   debt  by  naming 

THE   amount  of   THE  PRINCIPAL  INCLUDES  THE  INTEREST 
THEREON,  ........  19 

Purging  usury, 246 

By  agreement, 246 

By  payment, 247 

Rate, 147 

Conventional  rate, 

How  contracted  for, 7 

How  proved, 155 


426 


INDEX. 


Pajre 


Rate,  continued, 

Conventional  rate,  continued, 

Must  pay  it,  though  property  is  in  receiver' 
Advances,    ...... 

Legal  rate,  ...... 

IIow  proved,         ..... 

Of  interest  allowed  as  damages. 

In  England,         ..... 

In  the  United  States,       .... 

Executors,  .         .         .         • 

Judgments,      ...... 

Legacies,         ...... 

Express  maintenance  on  a  legacy. 
Money  had  and  received. 
Receivers,  ...... 

Mixing  funds,     ...... 

Reckoning  time  in  usury, 

Recognizances,     ...... 

Release  is  a  defence  to  clai.^i  of  usury,    . 
Renewal  of  note  in  usury,    .... 

Rent, 

Replevin,      ....... 

Bonds, 

Rests  «n  accounts, 

Administrators,       ..... 

Agents, 

Damages, 

Executors,  ...... 

Guardians,      ...... 

Trustees, . 

Royalties, 

Sales,  ........ 

Security,  ....... 

Realizing  from  sale  of,  stops  interest, 
Effect  of  subsequent  personal  agreement, 
In  usury, 

Sulisequcnt  security,    .... 

Additional  sccui'ity,  .        .        .        . 


hands,    19 

44 

.  151 

153 

.   32 

32 

.   32 

52 

104,  106,  150 

.  121 

120 

.  126 

72 

.   72 

224 

.   89 

298 

.  228 

129 

.  131 

90 

38 

.   43 

97 

53,  56 

62 

.   78 

131 

.  131 

.  18,  19 

18,  19 

19 

228 

.  232 

INDEX. 


427 


Sheriffs, 

Simple  interest,    .... 
Stakeholders,  .... 

Statute  of  limitations, 
Effect  upon  interest. 
No  effect  during  Eebellion, 
Extension  of  time, 
Eevival,      ..... 
Defence  to  claim  of  usury. 
Statutes,  Interest, 
Change  of  statutes, 
Force  in  other  states. 
Text  of  the  general  interest  statutes, 

Alabama, 

Arizona, 

Arkansas, 

British  Columbia, 

California, 

Canada, 

Colorado, 

Connecticut, 

Delaware, 

District  of  Columbi 

England, 

Florida, 

Georgia, 

Idaho, 

Illinois,  '. 

Indiana, 

Iowa, 

Kansas, 

Kentucky, 

Louisiana,   . 

Maine,    . 

Maryland,    . 

Massachusetts, 

Michigan,  . 


Page 
67 
17 
72 
303 
303 
303 
304 
304 
299 
306 
307 
306 
308 
317 
319 
320 
314 
323 
310 
326 
329 
330 
331 
308 
332 
333 
336 
338 
340 
343 
344 
345 
348 
349 
351 
352 
357 


428                                                     INDEX. 

Page 

Statitls,  Intkukst,  continued, 

Text  of  the  general  interest  statutes,  continued, 

Minnesota,       ....... 

.     3G0 

Mississippi,           ...... 

363 

Missouri,         ....... 

.     3G1 

Montana,     .         .          ... 

3GG 

Nebraska, 

.     367 

Nevada,       ....... 

368 

New  Brunswick, 

.     313 

New  Hampshire,           ..... 

3G9 

New  Jersey,    ....... 

.     371 

New  Mexico,        ...... 

373 

New  York,      .         .         .         .         .         .         . 

.     374 

North  Carolina,    ...... 

378 

North  Dakota, 

.     379 

Nova  Scotia,        ...... 

312 

Ohio, 

.     383 

Oklahoma,             ...... 

385 

Ontario,           ....... 

.     311 

Oregon, 

386 

Pennsylvania,          ...... 

.     388 

Prince  Edward  Island,           .         .     •     . 

315 

Quebec, 

.     311 

Rhode  Island, 

389 

South  Carolina,        ...... 

.     391 

South  Dakota,      ...... 

392 

Tennessee, 

.     396 

Texas,          ....... 

398 

United  States,          ...... 

.     315 

Utah, 

400 

Vermont,         ....... 

.     400 

Virginia,      ....... 

401 

Washington,    ....... 

.     404 

AVest  Virginia,     ...... 

404 

Wisconsin,       ....... 

.     406 

Wyoming.    ....                   .         . 

409 

Stockiioldkhs, 

.       73 

INDEX. 


429 


Subrogation  in  usury,        .... 

Subscriptions,        ...... 

Sureties,   ....-•• 

When  interest  begins  to  run, 

Discharge,       ...... 

Recovery,  ...,•• 

Interest  paid  in  advance  beyond  maturity, 
Legal  interest,  ..... 

Usurious  interest,         .... 

On  replevin  bond,         .         .         •         •  • 

May  plead  and  recover  usury, 
Tables, 

Compound  interest  tables,    .... 

Use  of  interest  tables  in  usury, 
Taxes,  ....••• 

Tender  stops  intkrest. 

Transfer  of  intekest,  ..... 

Treasurers,       .....••• 

Trifling  amount  of  usury  not  usurious, 

Trover,      ......-•• 

Trustees,       ......•• 

In  England, 

In  United  States, 

Accounts,       .  ....... 

Rests,      . 

Advances,        ........ 

Compound  interest,     ...... 

Disbursements,        ....... 

Distribution  of  estate,  ..... 

Investments,  ....■••• 

Profits, 

Need  not  necessarily  pi  ay  for  interest,     . 
Trustees  in  trustee  process.    See  Garnishee  Process. 
Usury, 

Definition,  ........ 

History,  ........ 

Usurious  interest  paid  in  advance  beyond  maturity  will 
not  discharge  sureties,     ..... 


Page 
237 
.     134 
13,  73 
.       73 
74 
.       75 
13,  14 
.       13 
14 
.     110 
273 


1G4-166 

224 

.     134 

122,  142 

.       17 

68 

.     224 

135 

.       75 

75 
.       75 

78 
.       78 

78 
.       77 

78 
.  78 
75,  76 
.       77 

79 

1,  197 

1,197 

197 


14 


430 


INDEX. 


UsuRV,  continued, 

Law  of  what  place  governs,     .          .         .         .          .  190 

Practice, 193 

Law  of  what  time  governs,     .          .          .          .          .  193 

Novation,    .........  I'JO 

"What  contracts  are  usurious,    .....  201 

Usury  in  original  contract,        .  ,  .  .  .210 

Discounting,         .          .          .          .         .         .          ,  211 

Forbearance  to  sue,  ,         .         .         .  .  .212 

Lender  nuist  receive  the  usury,     .          .          .          .  213 

Receipt  of  usurious  interest,    .  .  .  .  .213 

AVliat  contracts  are  not  usurious,      ....  214 

Sales, 21.') 

Usury  must  be  paid  for  the  use  of  money,  etc.,     .  215 
Frequent  payments  of  interest,          .         .          .          .221 

Compound  interest,      .         .         .         .         ,         .  221 

Interest  on  condition,  etc.,        .....  222 

Made  payable  in  another  state,     ....  223 

Ante-date  interest,            ......  223 

Ante-dated  notes,         ......  223 

Reckoning  time,       .......  224 

Trilling  amount  of  usury,     .....  224 

Interest  in  advance,         ......  224 

Interest  tables,     .......  224 

Charging  market  rates  on  time  bills,         .         .         .  225 

Time  price  higher  than  cash  price,         .          .          .  225 

Fluctuating  values,          ......  225 

Security  for  first  loan  when  making  second,            .  22G 
Payment  of  usurious  interest  by  stranger  at  debtor's 

request,        ........  226 

Oppressive  contracts,   ......  227 

Contracts  to  effect  usurious  contracts,           .         .         .  227 

Subsequent  security,    ......  228 

Renewal,         ........  22.S 

Additional  security,            .....  2.)1 

Absolute  deed,         .......  232 

Forl)earance,        .......  232 

Novation,        ........  232 


INDEX. 

431 

Page 

Usury,  continued^ 

•  Contracts  to  effect  usurious  coutracts,  continued 

? 

Awards,       ....... 

233 

Decrees, 

.     233 

Judgments,            ...... 

233 

Subsequent  coutracts  for  usury, 

.     233 

To  pay, 

233 

To  receive,     ...... 

.     234 

Legal  consideration  of  usurious  contracts. 

235 

Usurious  interest  as  a  consideration,    . 

.     236 

Subrogation,    ....... 

237 

Parties,       ....... 

.     237 

Agents,        ....... 

237 

Liability,     ...... 

.     239 

Bonus,  etc.,      ...... 

239 

Banks,     ....'.. 

.     242 

Guarantors,           ...... 

243 

ludoisers,         ...... 

.     242 

Accommodation  indorsers. 

243 

Partners,          ...... 

.     244 

Sureties,      ....... 

244 

Purging  contracts  of  usury. 

.     246 

By  agreement, 

246 

By  payment 

.     247 

Relief  from  usury, 

249 

Directly  iu  equity, 

.     250 

By  borrower, 

250 

Cancellation, 

.     252 

Discovery,    ...... 

.     ^    252 

Injunction, 

.'  252 

Reconveyance,      .         .         .         .         . 

253 

Recovery  of  usury  paid,    . 

.     253 

By  lender,         ...... 

253 

Recovery  of  usury  paid. 

.     254 

By  forfeiture, 

261 

By  set- off, 

.     257 

By  suit, 

254 

432 


INDEX. 


UscRT,  co7itimied, 

AVho  nia}'  recover  or  plead  usury, 
Assignees,  .... 
Creditors, 

Devisees,  .... 

Guarantors, 

Heirs,       ..... 
ludorsers,     .... 

Accommodation  indorsers. 
Makers,        .... 

Accommodation  makers, 
Oppressed  parties, 
Partners,  .... 

Payors,         .... 
Privies,     ..... 
Purchasers  from  mortgagors. 
Representatives, 
Second  mortgagees. 
Sureties,  .... 

Wives,         .... 
Who  is  liable  to  return  usury  paid, 
Pleading  and  practice, 

Pleading,  .... 

Proof,  .... 

Oral  evidence, 

Burden  of  proof, 

Quantity  of  evidence. 

Character  of  proof, 

Costs,  .... 

Recovery  of  security, 
Law  and  fact, 
"Wiio  may  be  witnesses, 
Defences  to  claim  for  usury, 
Bmafvle  bolder. 

Accommodation  paper. 
Estoppel, 
Judgment,         .... 


Page 


.  262 

2G4 

.    .    .265 

266 

.  2G7 

267 

.  267 

268 

.  268 

268 

.  269 

269 

.  269 

269 

.  270 

272 

.  272 

273 

.  274 

274 

.  275 

275 

.  280 

281 

.  282 

282 

.  282 

283 

.  284 

284 

.  285 

288 

.  288 

292 

.  294 

•    .    .    295 

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